The Hindu Business Line : ABG may gain from synergies

ABG Shipyard’s plan to acquire a stake and participate in the revival plan of ship-repairing company Western India Shipyard (WIS) is likely to provide operational synergies to the former.

Under the scheme, ABG is likely to hold 51 per cent stake in WIS, one of the largest private ship repair yards, once the revival plan is completed. It will infuse Rs 25-crore cash to revive WIS and also aid the company in raising debt.

ABG was earlier looking to add four dockyards in the east and west coasts of the country, to repair vessels as demand for sea transport has been robust.

The company has been investing in expansion and making strategic acquisitions to improve its ship building capacity.

The current acquisition is likely to be positive for ABG because of the strategic location of WIS in the western coast (in Goa) thus providing stronger positioning in the high-margin ship and rig repair business.

The move is also welcome for WIS which has been posting losses as a result of mounting interest costs. The company has already received restructuring packages from banks and institutions as a result of which institutional shareholding in the stock has been on the rise. As the takeover follows a court directive, there will be no open offer to the shareholders of WIS.

BL Research Bureau

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