MUMBAI : ABG Shipyard and Bharati Shipyard, which are battling to gain control of oil drilling company Great Offshore, have opened another front
in Chennai to buy a controlling stake in Tebma Shipyards that could boost their ability to build ships for navy, two persons familiar with the development said.

Both the firms have started due diligence on Tebma, possibly to buy ICICI Venture Funds’ 53% stake in the company, one of the persons quoted earlier said. “I-Venture has not yet decided whether it will fully exit Tebma or offload a part of its shareholding. A final decision will depend on the valuation being quoted by the interested parties,” he said.

I-Venture is learnt to have put a price tag of Rs 125 crore for its stake, valuing the company at around Rs 250 crore. Spokespersons for ABG, Bharati and ICICI Venture declined to comment for the story. “Since ABG and Bharati are targeting orders from the defence sector, additional capacity could work to their advantage,” Prabhudas Lilladhar analyst Kejal Mehta told ET.

Tebma, which has facilities in Karnataka’s Malpe, Kochi in Kerala and in Tamil Nadu, is India’s third-largest private shipbuilder. The company is listed on the dysfunctional Over the Counter Exchange of India. The original promoters own 4.93% in the company, ICICI has 53% and the rest is with public.

For Bharati and ABG, this will become the second major battle this year as they strive to outdo each other in building capacities in a country where the orders from the navy and oil companies are surging. The battle for Great Offshore is yet to be decided with Bharati and ABG valuing the target at over Rs 2,000 crore. But, in terms of the bid, Bharati, which has a market value of Rs 555 crore, is offering Rs 560 per share for minority holders, while the Rs 1,197-crore ABG is giving Rs 540 a share. Bharati already owns 22.48% in Great Offshore, while ABG holds over 8%.

Tebma Shipyards fell into bad times during the global recession as orders dried up and some were cancelled. Earlier this year, Oslo’s DOF Subsea cancelled three orders, including one for a multi-purpose supply vessel. It incurred a loss of Rs 69 crore in the last fiscal year ended March 2009, against a profit of Rs 76 crore a year earlier. For ICICI Venture, the sale, if happens at Rs 100 crore, means little returns since it bought the 53% stake for Rs 96 crore in September 2007.