ABG Shipyard to approach CDR cell to restructure its payments obligation

16 Nov 2013 Evaluate

ABG Shipyard has decided to make reference to the Corporate Debt Restructuring (CDR) cell in order to restructure its payments obligation to match with its business potential. The company’s key banks have been supportive of the restructuring. The company has taken this step as the financial position has weakened and it has been facing problems in servicing the debt in a timely manner.

The global crisis has impacted the shipping industry severally due to fall in commodity demand & prices and subsequent fall in cargo demand and fall in freight rates, which has adversely impacted the Shipbuilding Industry including ABG Shipyard. In effect of global economic downturn, the finances available to ship owners have also dried up. Due to global liquidity crunch and impact on shipping industry, banks have reduced financing to the ship building business.

The above has resulted in piling up of inventory and WIP, which has further resulted in paucity of working capital and caused significant increase in the operating cycle, thereby aggravating the liquidity problem & financial problem. In the last couple of years the liquidity of the company was also strained due to delay in completion and stabilization of the ship lift facility at Dahej. As a result, Dahej Shipyard, which was built primarily for meeting the demand for Rigs and large size bulkers, has very low capacity utilization.

ABG Shipyard is one of the Largest Private Shipyard in the country and has developed expertise in building vessels of various types. The Company has one of the largest order book for Offshore Support Vessel (OSV) segment.

Peers
Company Name CMP
Mazagon Dock Ship 4080.15
Cochin Shipyard 1507.00
VMS Industries 44.24
Knowledge Marine & E 1843.65
Laxmipati Engineerin 205.60
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