Interview: Cochin Shipyard is working on two large expansion projects: Madhu S Nair, CMD

We have secured orders for construction and supply of two autonomous electric vessels worth Rs 125 crore from Norway, says Madhu S. Nair, Chairman & Managing Director (CMD), Cochin Shipyard Limited (CSL). During an exclusive interview Mr. Madhu S Nair said, the orders from Norway is very significant for both, Cochin Shipyard and India, as the world’s first autonomous vessels will be developed in India.

Q: Let us know about the order that you have received from Norway in detail in terms of size, execution time and the revenue you will generate from it?

A: We have secured an order of two autonomous electric vessels worth Rs 125 crore from Norway. We also have the option to build two more vessels of Rs 125 crore. But there is something that is more important than the order value and that is they are completely autonomous vessels in which there will no man on the board when this vessel is finally operated. They are zero-emission fully electric autonomous vessels. This is the first occasion in the world in which this kind of vessels is being built and the programme is on in Norway. The Norwegian government is involved in the project. It, the project, is partially funded by the Norwegian government. Other parties involved in the project include famous companies like Kongsberg, it is a maritime technology company of Norway and. Wilhelmsen Group, one of the most leading shipping groups of the world and is more than 200-year-old, a Norwegian company.

Kongsberg and Wilhelmsen Group have jointly established a new company named Massterly and they are behind this. The vessels will be delivered to a company called ASKO Maritime AS, the subsidiary group of Norges Gruppen, an 8-billion Euro company, which is one of the largest players in the Norwegian retail segment. These vessels will carry trailers, 16 fully loaded Standard European trailers in one vessel across the Oslo fjord, Norway. It will complete the one hour journey autonomously and this is the most important thing. I am extremely happy, as the order is very significant for Cochin Shipyard and India because the first autonomous vessels in the world are going to be built in India.

Q: With this addition, how big your order book is at present and how many additions can we expect in the remaining part of this year?

A: We have an order book of Rs 1,400 crore, at present, and it includes projects like shipbuilding, ship repairing, defence orders and commercial orders. However, the first two months of the year ended amid the lockdown and the production has resumed in May. Currently, 90% of operation has been started at the Shipyard. We hope that we will be able to sustain the last year’s turnover and profitability and are trying to do so. We are very hopeful that by the end of this year, we will not go down from where we were the last year. We will be at the same level and will try to go a little bit above to that level. We intend to keep turnover and profit at the same level and will try to not let it go down because of the COVID menace.

Q: You have a cash of Rs 2,200 crore in your balance sheet, which is around 50% of your market cap. Hopefully, you also get some advance from your customers and that’s why I want to understand what part of the cash available with you is advance and what part is the earned cash

A: There is an advance of around Rs 600 crore and the rest is the earned cash. In addition to this, we are also working on two large expansion projects and the deployment of these projects is also coming in. As a prudent economical financial policy, the amount required for these expansion projects’ has been kept in a separate account. Besides, we also have net free cash of around Rs 600 crore and the entire money is our cash. So, we have advances of around Rs 600 crore, besides expansion projects, we have absolutely free cash of Rs 600 crore.

Nowadays, there is a slight problem in cash flow, even from government entities. We have some financial receivables of ship repair from the Navy as well. We follow a prudent policy and keep our cash in books.