India’s largest private sector shipbuilder ABG Shipyard Ltd has agreed to buy India’s largest private sector ship and rig?repairer, the loss-making Western India Shipyard Ltd, from a group of financial institutions led by ICICI Bank Ltd.
ABG will invest Rs25 crore as its direct contribution and also help arrange a debt of Rs120 crore to restructure the Rs250 crore debt of the country’s only pure-play ship and rig repairer, said Dhananjay Datar, chief financial officer, ABG Shipyard.
ICICI Bank, IDBI Bank Ltd, State Bank of India Ltd, Bank of India and Industrial Investment Bank of India hold about 43% of equity in Western India .
The firm’s Goa facility has been a loss-making entity since starting operations in 1996 and the mounting losses, estimated at Rs186 crore, have eroded the net worth of the firm. In the 12 months to March 2007, Western India reported a net loss of Rs20.74 crore and in the first quarter of the current fiscal, it has registered a net loss of Rs2.85 crore.
“Strategically, it is a good buy for us. It is the only specialized ship repair facility in the private sector,” said Datar. The design, layout and equipment of Western India was provided by the Lisbon, Portugal-based ship repairer Lisnave Shipyards SA.
Western India’s facility can repair ships of up to 60,000 tonnes capacity and accommodate ships up to 225m in length and 32.5m in breadth. It can also build ships. “We foresee a great opportunity in the rig and ship repairing business in coming years. With Western India having advanced ship repairing facilities, there would be a great synergy between both ABG and WISL,” Rishi Agarwal, managing director, ABG, said in a statement.
The ABG and Western India boards met separately on Wednesday and approved the debt recast plan, subject to legal approval. ABG has been adding capacities by acquiring existing yards or building new ones to meet the growing demand for building ships at Indian yards as builders in maritime nations such as South Korea, Japan and China decline to entertain orders for building relatively smaller ships.
ABG is investing about Rs950 crore to build a new yard at Dahej, Gujarat. It has also agreed to buy Vipul Shipyard Ltd, its neighbour at Mag-dalla port in Surat, Gujarat.