Mumbai: Creditors of financially troubled shipbuilder ABG Shipyard have begun exerting intense pressure on the company’s promoters to offload a chunk of equity to strategic investors and effect changes in the top management.
India’s largest private sector shipbuilder continues to be involved in a complex corporate debt restructuring (CDR) exercise, under which creditors led by the government-owned State Bank of India agreed last year to recast INR110bn ($1.77bn) of loans, offering the shipyard a two-year moratorium on payment of interest and reduced borrowing cost, and also extended the repayment period.
However, the lenders are understood to have faced issues with ABG’s promoters, the Agarwal family, in terms of getting them to comply with conditions under the CDR package. This has led to bankers pressurising promoters into looking for a strategic investor.
ABG Shipyard has been badly affected by a prolonged global recession in the shipping industry, as freight rates have fallen in step with a decline in international trade, combined with a domestic economic slump.
Two other private sector shipbuilders, Pipavav Defence & Offshore Engineering and Bharati Shipyard are also in the financial soup. The former has been in the process of restructuring INR76bn of loans via the CDR route, while the latter faces a winding-up petition, being heard in the Bombay High Court this week.