Pipavav sees order book swelling six-fold

SKIL-promoted Pipavav Shipyard is bullish on large defence contracts coming its way, mostly from foreign countries which share friendly relations with India.

“Orders worth $3 billion are expected in the form of defence contracts from countries which share friendly relations with India in the next financial year. Apart from this, the total order-book expectation is around $6 billion to $7 billion, including domestic orders,” said a highly placed source, who did not wish to be named.

The company’s current order book stands at around $ 1.4 billion. Out of these, exports are around worth $ 690 million, offshore orders $110 million and defence orders around $600 million.

“We expect a good amount of business from countries which share friendly relations with India,” said Jigar Shah, chief financial officer, Pipavav, during an earnings call on Tuesday.

He said the company has already been shortlisted by two such countries for defence contracts. However, the official refused to share details of orders and as well as value expected from these countries.

In the past few months, the company has entered into various types of arrangements with global players.

It had signed a memorandum of understanding (MoU) with Transocean Offshore International Ventures in August 2010 for repairs of its fleet of offshore drilling units on the west coast of India.

Pipavav has signed a protocol with Rosoboron Export, a Russian government arm for defence cooperation with foreign governments last year and another MoU with Saab Dynamics AB, a part of Swedish multinational giant Saab - to tap orders in the defence segment.

In the December quarter, the company posted a net profit of Rs2.6 crore for the first time against a net loss of Rs39.82 crore in the corresponding quarter last year.

Total income for the reporting quarter rose 49% to Rs254 crore as against Rs167 crore for the same period last fiscal.

“Though, the company started commercial operations in fiscal 2010, fiscal 2011 reflects the first full year of complete operations. It should turn around in fiscal 2011,” said a Networth Stock Broking report on Tuesday.