Financial Analysis:

Pipavav Shipyard Limited

Hitesh Goswami
Roll No.31005
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.
Business Profile
"We are working towards being
a one-stop solution provider catering to various
requirements of our customers in the maritime
field.“
Engaged in
-Commercial Shipbuilding
-Offshore Fabrication
-Naval Vessels
-Ship Repair
 Aggregate Area
(198.92 Hectares)

SEZ EOU
(95 Hectares) (103.92 Hectares)
Opportunities
Infrastructure: Largest shipyard in India
: Largest Dry Dock in India.

Location: most strategic…..?

Contract of 2900cr from Indian Naval

Growing sector.
 Some Feats
• Successful completion of IPO and subsequent
Listing in NSE & BSE.

• won the Essar-CNBC TV-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.
Shareholding Pattern
Category of Shareholder % of holding
Promoter shareholding 39.56
Financial inst/Banks 9.49
LIC 1.53
FII 6.82
FDI 18.12
Corporate Bodies 18.90
Individual 5.22
Others 0.36
Total 100
The Company 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 FII’s and Corporate bodies.
 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.
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)
 Loans
• Proportion of long term secured loans have
increased.
• Short term loans gone up to 15000 lacs,
Primarily to fill working capital requirement.
Fixed Assets
• Have increased approximately 2100%.
Majorly due to increase in Building & Plant
machinery,
Shows huge capacity for future operations
 Capital work in Progress

• Again majorly consisting of plant & machinery

of around 97000 lacs still in progress.
• Major installed capacity.
• Long term benefit.
Investment
• Have sharply declined due to sale of LIC
mutual funds (appr.4000 lacs)

Sundry Liabilities sharply decline from

45000 lacs to 193 lacs
 Cash Flow
• Cash from operating activities is (52333 lacs)
mainly due to sharp fall in the current
liabilities or trade payables and high 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 it
would have been in deep financial crisis.
• Again the cash balance of 64000 lacs mainly
consists of almost 51000 lacs of short term fix
deposits.
• If we deduct cash from financing activities of
approximate 45000lacs and short term fix
deposits of 51000lacs then company would be
left with NEGATIVE cash balance of 45000lacs
 Some ratios

• Debt-equity ratio is less than one which is

consider good enough.

• Current ratio is less than 2 which appears to be

sufficient in meeting short term debts.

• Liquid ratio that is liquid assets/current liabilities

is more than 0.5 which is healthy enough.
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 is

significantly lower and company must redraw its
debtor management policy so that working capital
situation can improve.
• Inventory turnover ratio is also significantly
lower.
• and again inventory levels have drastically
reduced from previous year which is not good
sign of working capital management.

• Since this is the 1st year of operation, horizontal

comparison b/w different years can not be done
comprehensively.
Special attention

• Related party transactions of lease deposit of

7000lac needs special attention. There have
been continuous transaction of unsecured
loans between the group companies that
requires investigation.(pg no.105)
 Personal views
• Close scrutiny of cash flow from operating
activity along with schedule 7-12 (current
assets & current liabilities),
Gives the impression that there have been
efforts of Window Dressing to cover-up the
grey picture of operations.
• As shipbuilding is business with long gestation
period, and company is still in its investing
mode.
• Still no expectation of dividend for 2-3 years.
• Should invest in company, if interested in
capital appreciation, otherwise not.
Thank You