Pipavav Shipyard fixes Price Band of Rs 55-60 for IPO

MUMBAI, September 10, 2009: Pipavav Shipyard will enter the capital market with its IPO of 85,450,225 Equity Shares of Rs 10 each, with a price band of Rs 55-60, on September 16, 2009. The IPO closes on September 18, 2009.

Of the 85,450,225 Equity Shares, up to 600,000 Equity Shares have been earmarked for employees. The total issue, including the Employee Reservation Portion, will constitute 12.83 % of the post-issue equity share capital of the company. The net issue, i.e., the issue less the Employee Reservation Portion, will constitute 12.74% of the post-issue equity share capital of the company.

JM Financial Consultants Private Limited, Citigroup Global Markets India Private Limited, Enam Securities Private Limited and SBI Capital Markets Limited, are the book running lead managers and Kotak Mahindra Capital Company Limited and Motilal Oswal Investment Advisors Private Limited are the co-book running lead managers.

The issue is on a 100% book building process. The company plans to use the proceeds of the issue for the construction of facilities for shipbuilding, ship repair and the Offshore Business, margin for working capital and general corporate purposes.

Pipavav Shipyard will have India’s largest dockyard (upon completion and based on information available on the shipyards’ websites as to their actual capacity and their capacity under construction and assuming no further increases in such capacity).

The company has commenced construction of four vessels, the first of which is expected to be delivered in April 2010, with subsequent deliveries expected to occur at intervals ranging from one to three months thereafter.

Company executive deputy chairman Bhavesh Gandhi explained that Pipavav Shipyard currently has 10 firm order agreements for Panamax size vessels, 8 firm order agreements for Panamax size vessels subject to renegotiation, 4 firm order agreements for Panamax size vessels subject to arbitration and a notification of award of contract for 12 OSVs from ONGC. It has also submitted bids for seven naval vessels - five naval offshore patrol vessels and two cadet training ships.

The Pipavav Shipyard is located on the west coast of India adjacent to major sea lanes between the Persian Gulf and Asia. Upon completion of construction, the Pipavav Shipyard will be capable of ship construction and repairs for a range of vessels of different sizes and types, including naval vessels and coast guard vessels, as well as the fabrication and construction of products such as offshore platforms, rigs, jackets and vessels (but excluding sub-sea pipelines) for oil and gas companies.

The dry dock, measuring 662 meters in length and 65 meters in width, is capable of accommodating ships of up to 400,000 DWT and/or multiple combinations of smaller vessels including vessels catering to offshore activities such as offshore supply vessels (OSV), anchor handling tug supply vessels and multi-purpose support vessels. Installation of two Goliath cranes, each having a lifting capacity of up to 600 tonnes, is also in progress.

The Pipavav Shipyard was originally promoted by SKIL Infrastructure Limited and Grevek Investments and Finance Private Limited. These original promoters have been joined by Punj Lloyd Limited through its acquisition of 129,361,538 Equity Shares of the Company, which represents approximately a 22.29% pre-Issue shareholding in the company. SKIL has a track record of promoting infrastructure projects in India, and is experienced in owner-managed construction of infrastructure projects including the Pipavav Port, which received its first vessel in 1996, the Pipavav Railway and the Pipavav Link Road. Punj Lloyd is an engineering and offshore construction company in India providing integrated design, engineering, procurement, construction and project management services for energy and infrastructure projects.

Pipavav Shipyard is led by a team of qualified and experienced managers, both from India and abroad, who are focused on different aspects of shipbuilding. The company has also executed cooperation agreements with various companies that have substantial experience in the shipbuilding business.

For instance, it has entered into agreements with KOMAC, a Korean ship design consulting firm, to provide the Company with ship design, drawings, plans and documents, procurement support for supply of non-Indian sourced shipbuilding materials, shipboard machineries and equipments, production management services related to the start-up and initial operation of the Pipavav Shipyard, and technical support services related to the construction of the Panamax bulk carriers.

It has also entered into agreements with PILS Co. Limited of South Korea, a procurement and logistics firm, to assist it with the procurement of certain component parts for production, and has also executed a technical assistance agreement with SembCorp, a company which operates shipyards and offshore construction and fabrication facilities in Singapore.

Apart from focusing attention on the serial construction of large vessels built to standard specifications and widely used by ship owners, such as the Panamax bulk carriers, Pipavav Shipyard also intends to capitalize on expected growth in offshore oil and gas exploration and production activities by providing offshore fabrication facilities at the Pipavav Shipyard.

As a co-promoter, Punj Lloyd has agreed to conduct all of its offshore business (excluding the construction and fabrication of sub-sea pipelines) in India through the company and is expected to provide the company with access to opportunities in the Offshore Business industry.

Pipavav Shipyard also intends to focus on building ships for the military and the government, initially focusing on vessels for the Indian navy and coast guard. In addition, Pipavav Shipyard intends to utilize its shipbuilding facilities to repair a wide range of vessels, including VLCCs and OSVs, as well as naval, coast guard and other specialty vessels such as LNG carriers.

The Pipavav Shipyard is located adjacent to the Pipavav Port, a modern seaport. The Pipavav Port has connecting rail and road links, including a 273 km railway completed in 2003 and a link road completed in 2001.

The company’s subsidiary, E Complex, is involved in the development of a sector-specific Special Economic Zone (SEZ). Pipavav Shipyard Limited has established a unit in the SEZ developed by E Complex.

“Pipavav Shipyard Limited is proposing, subject to market conditions and other considerations, a public issue of its equity shares and has filed a red herring prospectus (“RHP”) with the Registrar of Companies, Gujarat, Dadra and Nagar Haveli, Ahmedabad. The RHP is available on the website of SEBI at www.sebi.gov.in and on the websites of the book running lead managers at www.jmfinancial.com, www.citibank.co.in, www.enam.com and www.sbicaps.com, and the co-book running lead managers at www.kotak.com and www.motilaloswal.com. Any potential investor should note that investment in equity shares involves a high degree of risk. For details, potential investors should refer to the RHP that has been filed with the Registrar of Companies including the section titled “Risk Factors”.

This announcement has been prepared for publication in India and may not be released in the United States. This announcement is not an offer for sale or solicitation of an offer to buy securities in the United States, or any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities of Pipavav Shipyard Limited have not been registered under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act.