Business of the Company
ABG Shipyard is in the business of manufacturing ships and also derives a small part of its revenue from repairs of ships. It builds bulk carriers, deck barges, interceptor boats, anchor handling supply ships, diving support ships, tugs and Offshore vessels.
For FY 2005 ABG Shipyard derived 73% of its revenue from commercial customers and 27% from Indian Government and government agencies and the break up between international and Indian companies is 66% and 34% respectively. ABG Shipyard has built over 88 ships since 1990 and currently has an order book position for 29 ships under construction. The shipyard is located at Magdala near Surat on the banks of river Tapi and is spread across 35 acres. Currently it can manufacture ships of a maximum length of 155 metres and a maximum weight of 20000 DWT. There is an indoor facility to build alumunium ships of a maximum length of 80 metres as well. The company is in the process of constructing a ship building facility at Dahej which is 150 kms away from the current yard.
Financials
The revenues have grown from Rs. 971 million in fiscal 2001 to Rs.3767 million in fiscal 2005. The Net profit after tax has risen from 18 million to 447 million in the same period. The EPS has been Rs. 2.7, Rs.3.8, and Rs. 14.3 in the years 2003, 2004 and 2005 respectively. The NAV per equity share is Rs. 30.90 and the return of net worth has been 21.6%, 23.2% and 46.2% in the 2003, 2004 and 2005 respectively.
The order book position as on July 16, 2005 is Rs 13,245 million to be executed over a period of next three years. The break up is 64% from Oil Industry and the remaining from environment protection ships, coastal vessels etc. This is a fresh issue of 8.5 million shares out of which 2.49 million is the retail portion.
Objects of the Issue
The issue is being undertaken to raise funds to establish a new shipyard at Dahej. The facility will consist of two dry docks measuring 400 metres in length, 45 metres breadth and 10 metres in depth. The two dry docks will be able to accommodate bulk carriers up to the weight of 120000 DWT. Two major process sheds of 70 meters x 200 meters are also being constructed in front of each dry dock and a common facility shed of 60 metres x 200 meters is being set up.
Conclusion
The issue has been priced between Rs.155 and Rs.185 and is aggressively priced. Therefore even the company has got solid order book position investors can avoid the IPO.
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