India: ABG Shipyard Faces Further Downgrade

India Ratings & Research (Ind-Ra) has downgraded ABG Shipyard Limited’s INR2bn non-convertible debenture (NCD) programme to ‘IND D’ from ‘IND BB-‘. The agency has also downgraded ABG Shipyard’s Long-Term Issuer Rating to ‘IND D’ from ‘IND BB-‘. The Outlook was Negative.

The downgrade reflects ABG Shipyard’s delays in repayments pertaining to the INR2.0bn NCD programme. The rating action has been triggered by the fact that the due date for redemption of the NCDs has expired and there is still part principal amount outstanding as on date. The NCD issue is the only debt instrument of the company rated by Ind-Ra.

ABG Shipyard had been experiencing tight liquidity for the past year, triggered by delays in receiving milestone linked payments from clients.

Incorporated in 1985, ABG Shipyard is the largest privately owned shipbuilding company in India. Till FY12, it had constructed and delivered 152 vessels of various types. Its manufacturing facilities are located at Surat and Dahej. For FY13, it reported operating revenue of INR20,911.5m (FY12: INR24,724.8m) and EBITDA margin of 30.4% (28.2%).

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Press release,October 3, 2013