Kochi: Private investors were upbeat over Cochin Shipyard Ltd (CSL)'s initial public offering (IPO) and they literally swarmed to get the shares, with subscriptions crossing a whopping 76 times the total shares! But the employees of the CSL gave a miss to the great opportunity with their cold attitude towards the IPO of the country’s largest shipyard in the public sector.
In the IPO, as many as 8.24 lakh shares were reserved for the employees of the CSL. But only 4.04 lakh shares got bids in this category, which means only a 48 percent shares got the subscription.
The issue is priced initially in the Rs 421- 432 per share range and has now been fixed at the upperband of Rs 432. It is widely predicted that the CSL shares would fetch a fancy price when it will be listed in the stock exchanges Friday. In that case, the employees of CSL, who turned their back on the IPO, are likely to lose huge profit they would have got as premium. Their loss would be the gain of the retail bidders. The IPO offered the shares at a discount rate of Rs 21 to employees and retail individual investors.
The trade unions had posed strong objection to the sale of the shares. There was no need to sell the shares of the profit-making shipyard in the name of expansion of the company, the trade unions argued. Even though the IPO of CSL is limited to 25 percent of the shares now, the employees fear that the central government would eventually go for more divestment and sell majority of the shares in future, leading to the privatization of the public sector unit.
In this context, a section of CSL employees desisted from buying the subsidized shares reserved for them. Meanwhile, the allotment of shares is likely to be finalized within two days. The government hopes to collect Rs.1,468 crore from the market through the IPO. With the amount, the shipyard is planning to construct a dry-dock at an estimated cost of Rs 1,800 crore and a ship repair yard at a cost of Rs 970 crore.