ABG Shipyard plans to cut debt 17% this fiscal
ABG Shipyard, India’s largest private shipbuilding company, plans to cut debt by around Rs400 crore, or 17%, this fiscal in line with its target to turn debt-free by 2014, Dnaindia reports.
The company has a total debt of Rs2,390 crore and a debt repayment commitment of around ¤150 crore this fiscal.
However, the higher debt repayment is not expected to reduce interest costs much.
“Our plan is to reduce debt to Rs2,000 crore in this financial year. Thus, we would be repaying Rs400 crore through operational cash flows. This will reduce interest costs roughly by Rs15-20 crore, which would be marginal as interest rates are rising,” said Dhanajay Datar, chief financial officer, ABG. The company’s total interest outgo for fiscal 2011 was around Rs140 crore.
In fiscal 2011 ABG reduced debt by Rs500 crore from Rs2,897.44 crore to current Rs2,390 crore.
Datar said the company plans to turn debt-free in the next four years. With no immediate capex requirements, he is confident the ABG may not require any major fundraising.
Kejal Mehta, analyst with brokerage Prabhudas Lilladher, said, “The planned debt reduction of Rs400 crore this fiscal looks possible. Debt has been a concern for the company in the past, the repayment would help reduce interest cost, which could be a significant relief,” said.
ABG’s current order book is around Rs14,500 crore, which the company expects to augment by Rs2,000-Rs3,000 crore in the next two to three years.
Recently, the shipbuilder received a licence to build warships for the Indian Navy.
“With this clearance we would be able to bid for all types of defence contracts. We would not be able to say what kind of defence orders we might get, but we plan to bid for them,” said Datar.
ABG is the second private shipbuilder player in India to receive such a clearance after Pipavav Shipyard. Pipavav has been signing various agreements to tap the foreign defence market as well.
Datar said, “ABG and for that matter all players in this segment are constantly looking for such opportunities.”
“The company’s order book looks quite sound and the recent licence to build navy warships is also a positive for the company,” said Mehta of brokerage Lilladher.
The company has a total debt of Rs2,390 crore and a debt repayment commitment of around ¤150 crore this fiscal.
However, the higher debt repayment is not expected to reduce interest costs much.
“Our plan is to reduce debt to Rs2,000 crore in this financial year. Thus, we would be repaying Rs400 crore through operational cash flows. This will reduce interest costs roughly by Rs15-20 crore, which would be marginal as interest rates are rising,” said Dhanajay Datar, chief financial officer, ABG. The company’s total interest outgo for fiscal 2011 was around Rs140 crore.
In fiscal 2011 ABG reduced debt by Rs500 crore from Rs2,897.44 crore to current Rs2,390 crore.
Datar said the company plans to turn debt-free in the next four years. With no immediate capex requirements, he is confident the ABG may not require any major fundraising.
Kejal Mehta, analyst with brokerage Prabhudas Lilladher, said, “The planned debt reduction of Rs400 crore this fiscal looks possible. Debt has been a concern for the company in the past, the repayment would help reduce interest cost, which could be a significant relief,” said.
ABG’s current order book is around Rs14,500 crore, which the company expects to augment by Rs2,000-Rs3,000 crore in the next two to three years.
Recently, the shipbuilder received a licence to build warships for the Indian Navy.
“With this clearance we would be able to bid for all types of defence contracts. We would not be able to say what kind of defence orders we might get, but we plan to bid for them,” said Datar.
ABG is the second private shipbuilder player in India to receive such a clearance after Pipavav Shipyard. Pipavav has been signing various agreements to tap the foreign defence market as well.
Datar said, “ABG and for that matter all players in this segment are constantly looking for such opportunities.”
“The company’s order book looks quite sound and the recent licence to build navy warships is also a positive for the company,” said Mehta of brokerage Lilladher.
