Edelweiss gets helping hand from PMO on Bharati Shipyard’s revival

MUMBAI: In what appears to be a sign of government's eagerness to revive ailing industries and help banks recover bad debts, it has extended the deadlines for delivery of ships by the beleaguered Bharati Defence and Infrastructure Ltd which defaulted on nearly Rs. 8,000 crores of debt to banks.

"We met MoD (ministry of defence) officials and Coast Guard," seeking pushing back of delivery schedules, Siby Antony, MD & CEO, Edelweiss ARC told ET in an interview. "All delivery schedules of ships had gone awry. Now we have received extension letter from the ministry of defence and have to deliver the first vessel only in December, which is almost ready for delivery."
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Edelweiss ARC which acquired a majority of Bharati Shipyard loans last year plans to invest Rs 400- 600 crore in the next two years as it attempts to make use of the government's thrust on making more defence equipment indigenously. The company fell into bad times amid an ill-advised buy of Great Offshore when the economy was collapsing all around.

But things are improving for the company which has been renamed, said Antony.

The reconstruction firm has identified 12 commercial vessels for delivery in the medium term out of which 6 are in the advanced stages of completion. The first vessel delivery is expected to earn the company a net cash flow of Rs 100 crore which will help it stay afloat in the near term.

The corporate debt restructuring package of Bharati Shipyard had failed in the first quarter of FY15, following which a consortium of lenders, led by State Bank of India (SBI), sold about 60% of its loans to Edelweiss ARC in July. Eleven lenders out of 23 sold their Rs 4,200 crore debt.

Bharti Shipyard currently has an order book for about 63 ships including different types of vessels from the Navy and Coast Guard. About two to three vessels are expected to be ready by the end of this fiscal while the next fiscal will see the completion of 15-20 vessels. The current order book is expected to keep the yards busy for the next 18-24 months.

Antony believes that he could turn around the shipyard and is in talks with Punjab National Bank to buy more loans of Bharti.

"The PNB CEO called a meeting with ARCs as the bank plans to offload a large quantum of bad loans. We want to buy the loan from PNB for two reasons, it's a large bank that hasn't sold a huge chunk of junk loans so far and debt aggregation of existing cases including Bharti" Antony said.