ABG Ship­yard’s ves­sel-own­ing unit docked as reg­u­la­tor re­vokes li­cence

PFS Ship­ping ac­cused of vi­o­lat­ing safety norms, not pay­ing crew for months

The Hindu Business Line - - FRONT PAGE -

Em­bat­tled ship­build­ing group ABG Ship­yard has landed in fresh trou­ble after In­dia’s mar­itime reg­u­la­tor re­voked a Doc­u­ment of Com­pli­ance (DoC) given to its ship-own­ing unit, PFS Ship­ping (In­dia) Ltd, pre­vent­ing it from op­er­at­ing ships.

The Direc­torate Gen­eral of Ship­ping (DGS) said that the firm’s DoC, is­sued in March 2016, has been with­drawn due to “re­peated vi­o­la­tions” of the global code on manda­tory safety re­quire­ments of ships and for non-pay­ment of crew salaries for many months.

The DGS had is­sued a show­cause no­tice to PFS Ship­ping, which owns three off-shore oil ex­plo­ration sup­port ves­sels, on Au­gust 23 and the com­pany re­sponded on Septem­ber 4.

The DG Ship­ping said that the firm’s re­ply to the no­tice “is not ac­cepted, es­pe­cially since the com­pany had been ad­e­quately warned ear­lier and it has been re­peat­edly vi­o­lat­ing the ISM code”.

“In view of above.. your DOC has been with­drawn,” Satish Kamath, engi­neer and ship sur­veyor cum DDG (tech­ni­cal) at the DGS, wrote in an Oc­to­ber 6 com­mu­ni­ca­tion to PFS Ship­ping.

Kamath later told Busi­nessLine that “ship safety can­not be com­pro­mised with”.

PFS told the reg­u­la­tor that the three ships were not be­ing used due to poor mar­ket con­di­tions and it would com­ply with the code after get­ting con­tracts for the ships.

A DoC is is­sued by the mar­itime ad­min­is­tra­tion where the ship is reg­is­tered — in this case by the DGS. Fail­ure to con­form to the rules could lead to its sus­pen­sion or with­drawal/can­cel­la­tion.

No cover

An im­me­di­ate fall­out of the with­drawal of the DoC is that these ships will lose in­sur­ance cover, ac­cord­ing to a Mum­baibased ship­ping con­sul­tant. “Ships with­out a DoC will not be able to trade,” he said.

PFS Ship­ping has not been pay­ing salaries to the crew and all its ships are laid up in Mum­bai port, said B Ratna Sekhar, chief sur­veyor-cum-ad­di­tional DG (Engi­neer­ing).

Sekhar said that PFS Ship­ping can reap­ply for the DoC after rec­ti­fy­ing all the de­fi­cien­cies but would have to start the process afresh.

This, how­ever, looks dif­fi­cult given the par­ent com­pany’s debt trou­bles, sources said. ABG Ship­yard is fac­ing in­sol­vency pro­ceed­ings in the Na­tional Com­pany Law Tri­bunal after it de­faulted on loans worth ₹4,500 crore.

In a July 4 stock ex­change fil­ing, the com­pany said it was in a “deep fi­nan­cial cri­sis” after re­port­ing a loss of ₹822 crore for the quar­ter ended De­cem­ber 2016, com­pared to a net loss of ₹1,266.22 crore a year ear­lier.

Lenders, who now hold a 51 per cent stake in the com­pany after con­ver­sion of debt, had made an un­suc­cess­ful bid to sell the stake.

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