Bharati Shipyard saw quarterly net profit slip while sales jumped about half as lower government subsidy and higher interest costs pinched profitability, a top official told reporters on Monday.

The shipbuilder posted a net profit of 326.85 million rupees in
July-September compared with 331.6 million a year ago. Net sales grew
to 3.2 billion rupees from 2.1 billion last year.

“Subsidy accounted for this quarter has been lower than last year
because of the nature of vessels. Interest costs have also risen in the
quarter,” Managing Director P.C. Kapoor said.

It received a subsidy worth 168.5 million rupees in the quarter
compared with 216.5 million last year, while interest cost
more-than-doubled to 236.1 million.

The company expects to show a “similar performance” in the next
quarter, he said, adding the firm has bid for several defence orders.

“There has been a slowdown in order book but we expect that to pick
up,” said the naval architect from IIT Kharagpur, overlooking the long
boardroom crammed with television cameras.

“We are expecting huge orders from the defence in the next 6 months,” he added, without giving any numbers.

Order book has remained mostly stagnant during the year as
uncertainties on the offshore side persist but Kapoor said there were
no cancellations so far.

The firm has an order book of 50.6 billion rupees while about 2.8 billion worth is pending execution.

The company, which is in the fray to acquire offshore services firm
Great Offshore Ltd, has a debt equity ratio of 1:1.25, Kapoor said.

BIDDING WAR

Great Offshore is caught in a two-way takeover battle with Bharati and
rival ABG Shipyard slugging it out to win the asset- and cash-rich firm.

The bidding war for Great Offshore was kicked off early this year when
Bharati made an open offer for 20 percent after acquiring a near-15
percent stake.

ABG Shipyard came in with a counter offer and since then the firms have
raised their offers more than once. Bharati has already invested more
than 3 billion rupees for a little over 23 percent stake in Great
Offshore.

Both the offers await market regulator’s approval.

“The approval should come by shortly. We are talking with SEBI to expedite the process.”

Source: Reuters

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