Pipavav Shipyard Limited

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  • 8/7/2019 Pipavav Shipyard Limited


    Financial Analysis:

    Hitesh Goswami

    Roll No.31005

    Pipavav Shipyard Limited

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    History of Company

    The company, then wholly owned

    Subsidiary of SKIL.

    It was incorporated as Pipavav Ship

    Dismantliang and Engineering Limited as on

    October 17,1997.

    In April 2005, IL&FS, became shareholder

    and name changed to Pipavav Shipyard


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    Business Profile

    "We are working towards being

    a one-stop solution provider catering to various

    requirements of our customers in the maritimefield.

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    Engaged in

    -Commercial Shipbuilding

    -Offshore Fabrication

    -Naval Vessels

    -Ship Repair

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    Aggregate Area(198.92


    SEZ(95 Hectares)



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    Infrastructure: Largest shipyard in India

    : Largest Dry Dock in India.

    Location: most strategic..?

    Contract of 2900cr from Indian Naval

    Growing sector.

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    Some Feats

    Successful completion of IPO and subsequent

    Listing in NSE & BSE.

    won the Essar-CNBCTV-18 Infrastructure

    Excellence Award 2010 in the Ports and

    Shipyards category.

    Granted ISO 9001:2008, ISO 14001:2004, OHSAS

    18001:2007 Certificates by Det Norske Veritas.

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    Shareholding Pattern

    Category of Shareholder % of holding

    Promoter shareholding 39.56

    Financial inst/Banks 9.49

    LIC 1.53FII 6.82

    FDI 18.12

    Corporate Bodies 18.90

    Individual 5.22

    Others 0.36

    Total 100

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    TheCompany is closely held company that is

    nearly 40% share is held by promoters and

    General public has stake of only 0.36%.

    Other is held by FIIs andCorporate bodies.

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    Financial Analysis

    Period of operation: 1st April 2009 to 31st March 2010

    IPO in October 2009


    64rs High/ 47rs low performed consistently and reached to

    72rs High/ 54rs low in march 2010

    Considering even more wide fluctuation this small change is


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    Balance sheet

    Reserves & surplus have gone up by 53%.

    Has been mainly due to securities premium

    received on issue of shares and not due to the


    (Shares are issued at a premium rate)

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    Proportion of long term secured loans have


    Short term loans gone up to 15000 lacs,Primarily to fill working capital requirement.

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    Fixed Assets

    Have increased approximately 2100%.Majorly due to increase in Building & Plant


    Shows huge capacity for future operations

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    Capital work in Progress

    Again majorly consisting of plant & machinery

    of around 97000 lacs still in progress.

    Major installed capacity. Long term benefit.

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    Have sharply declineddue to sale of LICmutual funds (appr.4000 lacs)

    Sundry Liabilities sharply decline from45000 lacs to 193 lacs

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    Cash Flow

    Cash from operating activities is (52333 lacs)

    mainly due to sharp fall in the current

    liabilities or trade payables andhigh payments

    made to the receivables. This is sign of poor

    working capital management.

    If company would not have generated cash

    from investing activity & financing activity itwouldhave been in deep financial crisis.

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    Again the cash balance of 64000 lacs mainly

    consists of almost 51000 lacs of short term fix


    If wededuct cash from financing activities of

    approximate 45000lacs and short term fix

    deposits of 51000lacs then company would be

    left withNEGATIVE cash balance of 45000lacs

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    Some ratios

    Debt-equity ratio is less than one which isconsider goodenough.

    Current ratio is less than 2 which appears tobe sufficient in meeting short term debts.

    Liquid ratio that is liquid assets/currentliabilities is more than 0.5 which is healthyenough.

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    Cash and Bank balance is 44% of current assets ,

    which appears to be slightly higher and company

    may be loosing the other investment


    Debtors turnover ratio is 1.11% which issignificantly lower and company must redraw its

    debtor management policy so that working capital

    situation can improve.

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    Inventory turnover ratio is also significantlylower.

    and again inventory levels havedrastically

    reduced from previous year which is not goodsign of working capital management.

    Since this is the 1st year of operation,horizontal comparison b/w different years cannot bedone comprehensively.

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    Special attention

    Related party transactions of leasedeposit of

    7000lac needs special attention. Therehave

    been continuous transaction of unsecured

    loans between the group companies that

    requires investigation.(pg no.105)

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    Personal views

    Close scrutiny of cash flow from operating

    activity along with schedule 7-12 (current

    assets & current liabilities),

    Gives the impression that therehave been

    efforts ofWindow Dressing to cover-up the

    grey picture of operations.

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    As shipbuilding is business with long gestation

    period, and company is still in its investing


    Still no expectation ofdividend for 2-3 years.

    Should invest in company, if interested in

    capital appreciation, otherwise not.

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    Thank You