What led to the CDR
There were some three to four reasons for us to go for CDR. In 2008-09, there was an upswing in vessel orders across the globe and we decided to expand shipyards in Dabhol and Mangalore where we had to put in a lot of capital. We had taken short-term loans. Then, in 2009, came the Great Offshore acquisition, which was done through internal accruals. Simultaneously, the global recession started and order size shrank and dipped. In 2011, there was a slowdown in Europe and almost 70% of our export orders that come from there was impacted. Money that we needed to build ships was going in interest payment. Unavailability of long-term loans and high interest rates added to it. That is why our bank has recommended that we go for CDR, which will postpone repayment of loans, and we can use those funds for our working capital.
Did an expensive purchase of Great Offshore add to the cash crunch
Some reports say that we are in this situation because of the Great Offshore acquisition. Its only because they dont know the facts. The original promoter of Great Offshore was from the Sheth family. In 2008-09, we had R1,200 crore orders from Great Offshore, if we had not stepped in during the bidding, the company would have gone to our rival. For the last 20 years we have been building ships for Great Offshore, so a synergy was already there. Had we not acquired the company, we would have lost a large number of orders and Bharati Shipyard would have suffered. Then we would have been answerable to our shareholders, people who gave us orders, investors and banks.
How will CDR help revive your company
This has given us a cushion to work. Our money which was going as interest was making our work suffer as we were not able to put enough money on completing ships. Our funded loan of R2,800 crore is being restructured, which is a term loan. Total debt is R3,400 crore, which includes R600 crore as working capital. We have gone for a scheme, which has been approved by the team of experts who have done techo-economic valuation of the company. They say it is beneficial for the company and that we will come out healthier. The two promoters of the company have not gone anywhere. We have a model, we have business offers, the situation will be better in the next two years and we will bounce back.
Investors and shareholders are a worried lot. What message you have to regain their confidence
We urge them to see the plan. At present, what is happening is because of expansion of the shipyards, saving the companys orders by acquiring Great Offshore, slowdown in the world economy and troubles of the EU nations leading to deceleration in their payments. We just have cash problem and that is why we need support from the bank. This, we are not able to put enough money on completing ships.
One reason for your cash crunch was Europes weak economy, giving you 70% orders. The continent is yet to recover.
We have 70 ships under construction and our order book size is of R6,000 crore. Earlier we had more orders from Europe, now that ratio is changing. Slowdown is in the world market, but Indian orders are growing. There is no recession in the offshore segment. Oil will be in demand in the future. This is where Great Offshore will help us. Some ask if Great Offshore also will go for CDR; the answer is no, because it doesnt need to.
The Indian economy is also slowing. Is that a concern
We have more orders coming from India for oil and defence and demand for ships from port trusts. We have huge tenders and indications for defence orders. Defence and oil demand will help us, oil is a large market and defence is catching up fast.