Shipyard workers get Rs. 5.04 crore sinking feeling
By Express News Service | Published: 12th August 2017 01:12 AM |
KOCHI: The shares of Cochin Shipyard Ltd (CSL), the Kochi-based PSU shipbuilder, made a strong debut on the stock exchanges on Friday with its share price rising to Rs 528.15, up Rs 96.15/ share or 22.25 per cent from the issue price of Rs 432/share. A strong opening was expected,considering the Rs 1,450-crore IPO was subscribed by 76 times. The shares opened at Rs 440.15 and touched a day’s low of Rs 435, before closing at the day’s high of Rs 528.15/share.Though the Cochin Shipyard share prices rallied, the company’s employees could not capitalise on the bonanza as they did not fully bid for the shares earmarked for them. A total of 8.24 lakh shares were reserved for the 1800-odd CSL employees, but they only bid for 3.93 lakh shares.
Considering there was a discount
of Rs 21/share for workers, they have collectively lost Rs 5.04 crore (notionally), based on the first day’s closing price.The Shipyard’s IPO comprised a fresh issue of 2.2656 crore share and an offer for sale of 1.1328 crore shares. The PSU will use the proceeds from the share sale (Rs 978.74 crore) for setting up a new dry dock within the existing premises and building an international ship repair facility at Cochin Port Trust area, besides other general corporate purposes.CSL reported a net profit of Rs 312 crore on revenues of Rs 2,059 crore in 2016-17. The way Cochin Shipyard public offering played out resembled initial share issuance of Coal India Ltd, the public sector coal miner, in 2010.Trade unions had asked the employees of Coal India to boycott the mega IPO, though the government reserved 10 per cent of the total shares on offer for them.
like Cochin Shipyard, the Coal India shares were offered at a discount of five per cent from the issue price of ` 245. Out of the 6.3 crore shares offered for employees, only 10 per cent of the shares received bids. On Coal India listing day,the share price touched a high of ` 340. This is a notional loss of ` 623 crore for the employees as they refused to invest in the IPO.
When asked why Cochin Shipyard authorities did not give financing for its employees to bid for its IPO, an official said: “We could’ve arranged loans for the employees for investing in the IPO, but SEBI (capital markets regulator Securities and Exchange Board of India) regulations prohibit any such arrangement.”