ABG SHIPYARD
Three years ago, promoters led by Rishi Agarwal held a 68 per cent stake in ABG Shipyard, once India’s largest private sector shipbuilding yard. Though business started slowing down post the 2008 global meltdown, Agarwal the nephew of Essar’s Ruia brothers never lost faith and kept increasing the stake from 57 per cent in March 2009. Today, the promoters’ stake at 10 per cent is less than that of ICICI Bank. Banks led by ICICI Bank already have 51 per cent equity in the company after invoking SDR in 2015.
In the past, there was interest shown by various group including Anil Ambani’s Reliance Defence, Shapoorji Pallonji Group, Liberty of UK and Cochin Shipyard. Bankers are hopeful that the deal would be sealed soon under the bankruptcy code. The NCLT bench of Ahmedabad will soon admit the company based on the application of lead bank ICICI Bank.
Bankers are in complete control of the company with a majority stake. But consultants say the equity shareholding of banks is of little consequence because debt has to be right-sized to get the company back on track. "There has to be a resolution plan,” says a consultant. The company’s debt is at `8,731 crore against revenues of a mere `38 crore. Mumbai-based ABG Shipyard is a good candidate for complete sale to a new promoter or liquidation.
Dhananjay Datar, CFO of ABG Shipyard says the company is fully supportive of every action of lenders which can help the company come back to life.” This is one of the best and modern shipbuilding yards in India. It is the worst business cycle that made the company see these times. We firmly believe that given an opportunity, ABG will come back to the forefront,” he says.
The shipping and shipbuilding industry has been going through a deep slowdown because of excess capacity globally. Other shipyards like Bharati Shipyard, Pipavav Shipyard and L&T Shipyard are also struggling.
Bankers’ privy to stake sale discussions say they were under initial discussions with Liberty of UK when the RBI’S directive for bankruptcy proceedings came. There is now every possibility that lenders would continue discussions with Liberty. Some say there is a possibility of competitive bidding because of multiple interested parties. “You just cannot handover a company to a bidder. There will be challenges in courts,” says a corporate lawyer.