India’s largest lender State Bank of India (SBI) has put its loans to ABG Shipyard of around Rs 1,400 crore for sale to asset reconstruction companies (ARCs), sources told FE.
According to bankers, while other lenders of the consortium are debating whether to sell their share of loans to ARCs or look for an investor, SBI has recently decided to auction the shares. “Shipping firms are under a lot of stress due to falling freight rates and the economic downturn and ABG is no exception,” one of the bankers said. Other lenders to the company include Bank of Baroda (BoB), Canara Bank, Bank of India (BoI), ICICI Bank and IDBI Bank.
The company’s standalone gross debt stood at Rs 8,742 crore in FY16, up 26% from the previous year. In FY16, the company reported a net loss of Rs 3,705 crore on the back of Rs 34 crore in revenues. Its finance costs were at Rs 857 crore in the same period. ABG Shipyard is promoted by ABG International (17.54%) and Rishi Agarwal (0.52%). Other shareholders include nice banks and financial institutions (8.15%) and Religare Finvest (24.49%) among others.
In its FY15 annual report, the company said that due to 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. Lower demand of vessels resulted the Dahej Shipyard, which was built primarily for meeting the demand for rigs and large size bunkers, has very low capacity utilization,” it said.
Among India’s largest private sector shipyards, ABG Shipyard builds vessels like interceptor boats, battle practice target, cadet training ship, self-loading and discharging bulk cement carriers among others for the government and companies in India and abroad.
ABG Shipyard’s executive director Dhananjay Datar did not respond to calls and messages seeking comments.
The firm’s corporate debt restructuring (CDR) package was cleared by a consortium of 22-lenders led by ICICI Bank in March 2014 and was worth a whopping Rs 11,000 crore. As per the CDR package, the company was given 10 years to repay the loan, with a moratorium on interest payments of two years. The ABG recast was referred to the corporate debt restructuring cell in the October-December period of 2013, which saw referrals of Rs 45,000 crore.