India Ratings downgrades ABG shipyard to 'IND A-'

MUMBAI: India Ratings, a subsidiary of rating agency, Fitch on Monday said that its has downgraded ABG Shipyard Limited's Long-Term Issuer rating to 'IND A-' from 'IND A' and placed the rating on Rating Watch Negative.

The agency has also downgraded the rating on ABG's Rs 200 crore non-convertible debenture programme to Long-Term 'IND A-'/RWN from 'IND A'.

"The ratings are based on a consolidated view of ABG and its subsidiaries. The downgrade reflects the tightening of ABG's liquidity position and the weakening of its overall credit profile since FY12 (year end March). This follows the postponement of payments by a client towards an order for two oil rigs worth INR 21,486 million (under execution), leading to a large increase in working capital needs in FY12 and FY13 till date", India ratings said in a release.

ABG Shipyard is the country's largest shipbuilder and has an order book in excess of Rs 16,000 crore. Indian shipbuilders have been struggling in recent times with the industry only contributing to less than 0.2% of the global shipbuilding sector.