Russian Firm to Rescue Debt Ridden Indian Naval Shipbuilding Company

Global slowdown has severally impacted the shipbuilding industry across the world.

New Delhi (Sputnik) — In a bid to rescue itself from debt trap, India’s major naval shipbuilder is seeking funds from a Russian firm.

Mumbai based naval shipbuilder ABG shipyard has confirmed that it engaged with a Russian firm to sell a stake to improve the company’s financial strength. However, ABG shipyard did not disclose the name of the Russian firm as talks are underway.

“Company is exploring the possibility of strategic investors so as to improve the Company’s financial and operational strength. For this purpose, company has appointed Rothschild investment banker,” reads a statement submitted to Bombay Stock Exchange by ABG shipyard.

It is considered that the company received all required internal approval for this deal. Last year in June, ABG Shipyard stated that Lebanon-based Prinvest Holding SAL had taken interest in buying a stake in the shipyard.

The company reported loss of $557 million in the financial year ending March 2016. Total debt of the company is approximately $2.5 billion. “Major reasons for increased losses are low level of business activity resulting into low turnover, impairment of inventories and increased interest cost. The global economic slowdown has severally impacted the ship building industry,” the company’s annual statement read.

Earlier this month, Russian oil major Rosneft signed a $12.9 billion deal to purchase 49 per cent stake in Essar Oil, India’s second biggest oil refiner.