Download - Pipavav Shipyard Limited

8/7/2019 Pipavav Shipyard Limited

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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

Limited.


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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

Hectares)

SEZ(95 Hectares)

EOU

(103.92Hectares)


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Opportunities

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

BSE:

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

negligible.


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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

Operations.

(Shares are issued at a premium rate)


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Loans

Proportion of long term secured loans have

increased.

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

machinery,

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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Investment

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

deposits.

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

opportunities.

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

mode.

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