ABG Shipyard Limited
ABG Shipyard Limited, the country’s largest private shipbuilder, is an Ahmedabad-based shipbuilding company in India. Lenders are sceptical about the future of the company, as the attractiveness of the the financials and chances of revival are not favourable. Among the lenders, ICICI Bank has made the highest claim of .`4,877 crore on ABG, followed by IDBI Bank at.`2,573 crore and State Bank of India at .`2,316 crore. Among foreign banks, Standard Chartered Bank has made a claim of .`563 crore.
ABG Shipyard is a part of the ABG Group of companies with diversified business interests. Established in 1985, it is headquartered in Mumbai. It has shipbuilding operations in Surat and Dahej in Gujarat. Following its acquisition of Western India Shipyard Limited in October 2010, it operates a ship repair unit in Goa which is the largest ship maintenance facility in India. ABG Shipyard builds a range of commercial vessels. These include self-loading and self-discharging bulk carriers, container ships, floating cranes, split barges, anchor handling tugs, dynamic positioning ships, offshore supply vessels and diving support vessels.
ABG was granted clearance from the Government of India to build warships and various other vessels for the Indian Navy. It was the second corporate shipyard to receive this licence after Pipavav Shipyard. In 2004, it was awarded a contract to build pollution-control vessels for the Indian Coast Guard. In 2009, the Shipyard was selected to build 11 high-speed water jet propelled interceptors for the Coast Guard. In June 2011, ABG Shipyard was awarded a 9.7 billion (US$150 million) deal to build two cadet training ships for the Indian Navy. In January 2012, it won an order of 5 billion order from Shipping Corporation of India.
ABG Shipyard Ltd., the flagship company of ABG group was incorporated in the year 1985 as Magdalla Shipyard Pvt. Ltd. with the main objects of carrying Shipbuilding and Ship Repair business. In a span of 15 years from the year 1991, the company achieved the status of the largest private sector shipbuilding yard in India with satisfied customer base all around the world. The registered office and the yard are situated at Surat in the state of Gujarat and the corporate office is in Mumbai.
The Shipyard has state of the art, manufacturing facilities including a “Ship-lift Facility” with a lift capacity of 4500 tons, side transfer facilities, CNC plasma cutting machine, Bending rolls, Hydraulic press, Cold shearing machine, Frame bending machine and steel processing machinery. The Shipyard also has blasting shop and fabrication shop covered in 4 bays of 150 x 30 M each equipped with 20T EOT Cranes. The manufacturing process is in line with world-class standards and the Yard is certified by DNV for ISO 9001:2008.
The Shipyard has constructed and delivered over one hundred vessels including Specialized and Sophisticated vessels like Interceptor Boats, Self Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, etc. for leading companies in India and abroad.
The Yard has Multiple Building Berths, 2 Dry-docks, 125 m x 22.5 m X 5.6 m Fitted with Computerised Synchronous Shiplift Platform, of 4500 Tonnes Lifting Capacity and 155 m X 30 m x 7.5 m, Graving Drydock served by 80-T Goliath Crane span 50 m, height 35 m. and substantial cranage like NCK Rapier 150T Capacity, Tata P & H Make, 60-T Capacity, HM Make, 50-T Capacity, PPM 80T Capacity. The “Shiplift Facility” enables the yard to simultaneously build and repair many vessels and gives the yard a tremendous logistical advantage and flexibility. The Shipyard has executed many prestigious Shipbuilding and Ship-repair contracts against stiff International Competition for both Export and Domestic Markets. All these vessels have performed very well, thus establishing its reputation for building and delivering vessels of the best quality at competitive prices and delivery periods. The Ship Repair Division has successfully repaired and refurbished Dredgers, Ethylene Carriers, Bulk Carriers, Offshore Supply Vessels and Coast Guard Vessels.
ABG Shipyard successfully delivered 2 Nos. Interceptor Boats (45 knots vessels) in Aluminium hull with Water Jet Propulsion to the Indian Coast Guard, 2 x 4000 DWT Cement Carriers for Cement Ambuja International, Mauritius, 4 x 50T Bollard Pull SRP Tugs for Wijsmuller, Holland (An A.P.Moller & Co.). The most recent deliveries have been 4 x 60.8M Anchor Handling Tugs / Supply Vessels & 1 x 42M Well Head Maintenance Vessel (Aluminium Hull) for Halul Offshore, Doha, Qatar, 1 x 50M Well Test / Supply Vessel and 1 x 56M Well Test / DPS-2 Vessel for Al Mansoori Production Services, Abu Dhabi, 3 x 47M – 80T Multipurpose Vessel for Lamnalco Group, Sharjah, 4 x Utility Vessel for Zamil Operation & Maintenance Company Ltd., 1 No. 60.8M Diving Support Vessel – DP1 Halul Offshore Co., Doha are ready for delivery and 1 No. 83.5M Dynamic Positioning – DP2 Type Vessel with Diesel Electric Propulsion for Consolidated Contractors Construction Co., UAE. The Yard has been awarded an order for 2 Nos. 53M – 90T B. P. ASD Vessels from Lamnalco Group, UAE. We have also received Orders for 1 No. 90M Pipe Lay Barge, 5 Nos. 61M Anchor Handling Tug Supply Vessels and 1 No. 78M DPS-2 Diving Support Vessel from Maridive, Egypt, 3 Nos. 94M Pollution Control Vessels for Indian Coast Guard, 4 Nos. Articoupled Barges for Essar Shipping, 4 Nos. 63M Anchor Handling Tug Supply Vessels from Seatankers Management Co. Ltd., Norway and 1 No. 60.8M Offshore Supply / Supply Vessel from VROON B. V., Netherlands. ABG Shipyard Ltd is also proud of getting a prestigious order for 500 passenger vessel from the Administration of Andaman and Nicobar Administration, Port Blair.
Ministry concluded a contract with transparency in M/s ABG Shipyard Ltd., a private awarding a shipyard, in March 2004 for contract acquisition of three pollution control vessels for the Coast Guard. The acquisition process followed by Coast Guard HQ lacked transparency and deviated from prescribed purchase procedures, which also contributed to delay. Flaws and distortions in the procedures adopted by the Coast Guard and the Ministry yielded no assurance that the decision taken to award a contract worth Rs 368 crore for building specialized vessels to a private shipyard was technically sound and financially prudent. This is corroborated by the unsatisfactory progress of the project leading to revision in delivery schedule of the vessels. Payment of Rs 221 crore released to the shipyard is not commensurate with the milestones specified.
The underlying facility agreement dated August 5, 2010 executed between ABG Business Ventures Pte. Ltd., a syndicate of lenders comprising of Deutsche Bank AG (Singapore branch), Bank of Baroda (Singapore branch), Bank of India (Singapore Branch), State Bank of Mauritius Limited and Punjab National Bank (International) Limited, the Company and Varda Global Pte. Ltd. for an amount of upto USD 100,000,00029. The facility agreement states the commitment of DB (Singapore branch) to be of USD 20,000,000.
With the expansion in infrastructure in mind, the Navy, following proper tendering procedure, contracted the private sector ABG shipyard for building two purpose-built vessels for ‘afloat’ training of cadets. The ?970-crore contract was awarded in June, 2011, but what was hailed as a big push to the private sector in naval ship building soon ran into problems, thanks to design issues. But construction delays marred the project and the Navy was forced to convert operational vessels for training requirements of the squadron in the meantime. The shipbuilding contracts were on track till early 2014, but the project stalled after the company opted for corporate debt restructuring in September 2014 to repay loans to the tune of Rs 11,000 crore. The company passed through rough phase as it opted for corporate debt restructuring in September 2014 for repayment of Rs 11,000-crore loan. In Februray 2015 the promoters of cash strapped ABG Shipyard - a private shipbuilding company -- were in discussions with domestic and foreign companies to sell a strategic stake in their flagship listed entity. According to multiple investment banking sources involved, Mahindra Group, Adani and a few foreign players, include some from Singapore, had been approached.
The company reported a standalone net loss of Rs 897.70 crore for the financial year 2014-15. In May 2015 ABG Shipyard Limited was forced to temporarily suspend its operation at its Dahej yard near Bharuch after civil contractors intensified their agitation demanding the release of their long-due payment. The company had faced a similar problem in March-April after production contractors pressed for the payment of their outstanding dues. The company managed to strike a deal with them as the banks which are managing the company’s finances started releasing their due salary on terms set by them and agreed by the contractors. In February 2016 the CEO said the company might finalise stake sale deal by March-end. The cash-strapped shipbuilder would likely close the deal for a 51 percent stake sale by the end of this financial year, its managing director and CEO said. By April 2018 Liberty House, the UK based metals group, had once again emerged as the only bidder for ABG ShipyardNSE -2.86 % which is into the fourth round of bidding. The company had paid off its dues to Exim Bank to be eligible for bidding after it was found that its non-clearance of dues to the state-owned lender was an obstacle in its efforts to buy the defaulting company.
In December 2016 ABG Shipyard bagged a repeat order from the defence ministry worth Rs 485 crore to build a cadet training vessel for the Navy. The stock jumped nearly 5 percent to Rs 386 post this announcement. At that time the unexecuted order book was close to Rs 9,500 crore unexecuted. While ABG had quite a strong unexecuted order book one threat that remains on the Street with regards to ABG was the rising interest costs as well as debt-to-equity. That was the risk with every ship-builder in India, not ABG alone. All the corporates that had a lot of rupee exposure on debt are trying to switch that debt into External Commercial Borrowings (ECBs) if it is possible.
ABG Shipyard Limited into Corporate Insolvency Resolution Process (CIRP) in august 2017. As of August 03, 2018, as per Regulation 13 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the list of creditors containing the names of creditors along with the amount claimed by them, the amount of their claims admitted, the security interest and remarks, if any, in respect of ABG Shipyard Limited, imncluded 42,490,167,080 rupees from 493 corporate creditors, as well as a smaller amount from 1146 workmen and employees. Banks, led by State Bank of IndiaNSE -0.19 %, are set to reject the offer made by Liberty House for ABG ShipyardNSE 2.94 % on grounds that there’s no upfront payment of cash, and that the bid itself is too low, said two senior officials who did not want to be identified. London-based metals house Liberty House was the sole bidder of ABG Shipyard which is facing Rs 18,245 crore claims from financial creditors. Liberty House, part of the $12 billion GFG Alliance Group, promoted by British industrialist Sanjeev Gupta has shown interest in a number of firms facing insolvency process including the shipbuilder. Several large banks appeared to be averse to any proposal where the cash payment is not upfront. In all likelihood, ABG Shipyard would be liquidated.
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