Cochin Shipyard hosted a conference call on Aug 17, 2020. In the conference call the company was represented by V J Jose, Director (Finance), Rajesh Gopalakrishnan, Shibu John, Deputy General Manager (Finance) and Syamkamal N, Company Secretary.
Key take aways of the call
Hundred percent production loss for 45 days due to Coved 19. The company commenced operations on May 6 with 50% strength. Both shipyard and ship repair facilities face both non availability of labour as well as non availability of materials and equipment's. All suppliers have invoked force majure clause. The Mumbai ship repair facility was closed for entire quarter.
Both Shipbuilding and ship repair facility is currently working from 7 am to 10 pm a day. Introduced cost cutting measures as well as productivity improvement programmes.
Order book as end of June 30, 2020 was Rs 14393.17 crore of which order from Indian Navy for IAC & ASW Corvette is Rs 12553.11 crore for 9 vessels. Share of Ship Repair Orders as part of the order book is Rs 500 crore. The order books is sufficient for next 3 years.
Ship Building
Of the Q1FY21 Shipbuilding revenue of Rs 316 crore, of which about Rs 261 crore [Rs 186 cost plus; Rs 75 crore fixed price] is from Aircraft Carrier order and Rs 56 crore from others.
The company has either submitted or in the process of submitting bids for order worth Rs 12000-13000 crore including that for new generation offshore patrol vessels and multi-purpose vessels etc.
As far as Missile vessels orders, the bids were submitted and Indian Navy has to take a call now.
Order backlog of Indian Navy's ASW Corvette order is Rs 6300 crore. No revenue has been booked so far from ASW order and to start booking revenue from Q3FY21 onwards. Expect a revenue booking of Rs 150 crore in FY21 and around Rs 1000 crore in coming years. Not expecting any major delay due to COVID 19 as far as this order is concerned.
Of the current order book the share of Cost plus part is RS 3800 crore and fixed cost is Rs 2470 crore.
Value of two first autonomous ro-ro vessels bagged in Q1FY21 is worth Rs 120 crore.
IAC order is on nomination basis. Hereafter Indian Navy will go for competitive tenders and the company has to quote competitively.
Ship Repair
Certain confirmed ship repair orders have either cancelled or deferred in Q1FY21.
Currently resumed operations in Mumbai Ship repair unit, which was closed for entire quarter in Q1FY21 due to coved lockdown.
Expect a revenue of Rs 500-550 crore from ship repair segment for FY21.
The ship-repair segment has growth at about 22-25% in last 3 years. This segment is expected to reach a STO of Rs 1200 crore in next 3 years with ship repair facilities in Mumbai and Kolkata.
Not heard from Indian Navy regarding INS Vikramaditya, however the vessel would be due for repair in 2022 ending.
Other key takeaways
The company always looks at a growth of 10-11% but due to COVID that is not possible. However the company is looking at flat growth in revenue for FY21.
Expects financial performance to improve from Q2FY20 onwards.
NCLT orders have been passed in case of Tebma shipyard. The 90- day period has been extended on account of lockdown. CSL is looking to complete the process by September. Post this, the yard would undergo maintenance for a few months before ship-repair activities resume.
ISRF & dry Dock capex have been impacted owing to shortage of labour and non-availability of materials and equipment.
ISRF total capacity would be up to 70 vessels. For the first year, CSL expects Rs 200 crore worth of revenue while gradually increasing up to Rs 650 crore in three to four years after that.
GOI's embargo on imports of 101 items under AthmaNirba Bharat programme includes 11-12 types of defence vessels which are under bidding. This 101 items is only for defence vessels and not applicable for passenger, fishing vessels etc.
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