Investment in Karachi Shipyard

1
Investment in Karachi Shipyard Engineering Works

• Introduction
• Situation Appraisal
• Technical Evaluation
• Need Assessment
• Proposed Project
• Financial Evaluation

2
Investment in Karachi ShipyardIntroduction

• Background setup in early 50s
• Paid up capital is Rs. 464 million which is
  entirely owned by the Government of Pakistan
  (GoP)
• Autonomous commercial organization under the
  Ministry of Defence, GoP
• Quality Management ISO 9000 certification
• Located at West Wharf, Karachi and spread over an
  area of 71 acres

3
Investment in Karachi ShipyardSituation Appraisal

• Corporate governance uninterested
• Human resource depleted
• Infrastructure now mostly outdated
• Financial position generally poor
• The unit is a fit case for privatization
• However before going for privatization, KSEWs
  liabilities of Rs. 3 billion and losses of Rs. 2
  billion will have to be taken up by the Government

4
Investment in Karachi ShipyardTechnical
Evaluation

• Major physical facilities
• Design Drawing Offices Ship Building Berths,
  Ship Building and Fabrication Halls, Machine
  Shop, Fitting Shop, Carpentry, Electrical
  Installation Shops, Pipe Shops, Dry Docks, Repair
  / Out-Fitting Set-Up, Quay Walls, Ferrous/
  Non-Ferrous Foundries, Utilities Etc.
• Major Equipment Machinery
• Shot Blasting Plants, Lifting Cranes, Mobile
  Cranes, Overhead and Magnetic Cranes, Automatic
  Oxy-Cutting Machine, Heavy Bending Machine,
  Dishing and Rolling Machine, Welding Machine
  including Sub-Merged Arc Welding Machine, Tig and
  Mig Welding Machine, Heavy Machine Tools (Lathes/
  Milling/ Planing/ Boring/ Drilling/ Sawing
  Machine) Stress Relieving Furnaces, Electric Arc
  Furnaces, Cupola etc.
• Product Range Clients
• Shipbuilding
• Ship repairs
• Submarine and warships construction
• General Engineering Foundries

5
Investment in Karachi ShipyardNeed Assessment

• KSEW has great defense related opportunities
• Total defense purchasing and expenditure in
  target regions has been enormous especially the
  ship repair and maintenance of smaller crafts
  sector
• KSEW, after modernization will have greater
  potential in the domestic market

6
Investment in Karachi ShipyardProposed Project

• The objective of the Project is to Privatize KSEW
  in order to have further injection of capital in
  the system
• The scope of the Project is envisaged as under
• Arrangement for privatization of the Company.
• Arrangement of funds by the new owner to
  undertake BMR
• Undertaking of aggressive marketing to attract
  domestic as well as foreign customers
• Arrangement for HRD by the new owner

7
Investment in Karachi ShipyardFinancial
Evaluation

• It is estimated that KSEW would need an
  investment of about Rs.3 billion to undertake
  proper BMR
• This is in addition to the taking up of
  liabilities by the GoP of Rs.3 billion and losses
  of Rs.2 billion
• After BMR, implementation of HRD and aggressive
  market strategies, it is expected to have an IRR
  of 15 to 20.