ABG Shipyard is all set to take over Western India Shipyard (WISL) in a Rs 200-crore deal (around $48 million) to be announced in a few weeks.
ABG will get management control of WISL and the 40% stake held by financial institutions led by ICICI Bank. Sources said the deal will not be followed by an open offer as it is a court-initiated sale. The total debt of WISL has gone up to Rs 280 crore.
ICICI Bank, which has been coordinating the sale on behalf of lenders for over a year, is believed to have sorted out most of the pending issues with the highest bidder – ABG Shipyard. A host of court cases and various issues related to conversion of debt into equity and other concessions, which lenders were seeking from bidders, had delayed the sale of the company, said sources.
Senior ABG Shipyard officials confirmed they were in talks with ICICI Bank, but refused to divulge further details. On Thursday, shares of Western India Shipyard fell 5% to Rs 16.5 on BSE. As per the closing price, the company’s market capitalisation stands at around Rs 179 crore.
On July 20, ET had reported that ABG was in the race along with three other bidders – Bharati Shipyard, L&T and the Dempo group.
WISL owns and operates two ship-repairing yards in Goa. It is also looking at building small-sized ships and niche vessels at its yards. It had recently undergone a corporate debt restructuring, under which institutions had increased their shareholding to around 40% in the company from 15.34% in March 2007.
IDBI, IIBI, BoI, SBI and UTI are the other institutional lenders holding stakes in the company. The company has been put on the block by a consortium of banks as a functional asset and operational entity.
Initial promoters – Western Paques India, Western India Industries and Gadgil Western Corp – hold around 8% while retail investors hold the remaining 52% stake.
The company had suffered a loss of Rs 2.85 crore for the quarter ended June this fiscal with net sales of Rs 10.72 crore.
Some of the company’s clients include Reliance Industries, GE Shipping, Shipping Corporation of India and Bharati Shipyard, according to the company’s website. When the company underwent share capital restructuring recently, its paid-up equity capital came down from Rs 108.5 crore to Rs 21.7 crore.
Subsequently, the board appointed Subhash Kumar Mutreja as a whole-time director and CEO at the board meeting held on July 17, 2007. Also, Ram Swaroop Nakra, the ICICI Bank nominee, was appointed as a director.
ABG Shipyard has also submitted a price bid for Alcock Ashdown (Gujarat), a ship-building company owned by the Gujarat government.
The government invited bids to sell 100% stake in the ship-building firm, which has two shipyards — Bhavnagar and Chanch.
The Mumbai-based rating agency Crisil is advising the government on the sale, and the price bids are expected to be opened shortly. Sources said Gujarat government wanted to exit the business and is hoping to cash in on the current boom in global ship-building industry.
As the global ship-building and repair market is facing a demand boom, India has seen a consolidation wave among the existing players. In May, ABG Shipyard had taken over Vipul Shipyard in Gujarat for an undisclosed amount.
Souce: Economic Times