Bharati Defence and Infrastructure Ltd (formerly Bharati Shipyard) will focus on completing the construction of a couple of ships that are in an ‘advanced stage’, and improve its yard utilisation and cash flows, according to interim CEO Sameer Kaji.

The company has an order book for about 63 ships including different types of vessels from the Navy and Coast Guard.

About 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, Kaji said. He added that the company continues to enjoy the goodwill of its customers, and 90 per cent of the business had come from repeat orders. Since its inception in 1973, it has built about 400 ships.

Bharati Defence has a huge debt of about ₹8,000 crore on its books, a consequence of an unsuccessful acquisition and, subsequently, a failed corporate debt restructuring (CDR) scheme.

The company’s 23 lenders then came together and sold about 60 per cent of the loans to Edelweiss Asset Reconstruction Company (ARC), turning the latter into the largest player in this fledgling industry. Edelweiss ARC has since appointed Kaji as interim CEO with a mandate to turn things around at the shipbuilder.

Siby Antony, MD & CEO of Edelweiss ARC, said his company took on the debt because of the confidence it reposed in Bharati Defence promoters PC Kapoor and Vijay Kumar. Another reason was the banks were ‘practical’ and sold the debt at a discount. This doesn’t mean they will waive the ₹8,000 crore, he explained. The plan is to reduce the debt to a sustainable level.

Edelweiss ARC expects that in two years, there should be an improvement in the industry. And, given the order book of 63 ships, there is enough work for the next two-three years. “We can minimise the haircut and give banks also an upside,” said a confident Antony.

Meanwhile, the past four months has been a packed period for Kaji, who comes with the reputation of helping companies turn around their sinking operations.

BIFR reference His immediate challenges have been to keep Bharati Defence as a going concern and find ways to fund the operations, even as a reference to BIFR was made to declare the company as sick, to forestall a winding up petition filed by some creditors.

He has also had to keep communicating to his staff, suppliers and banks about the turnaround plan and secure a buy-in from all the stakeholders. Some part of the problem is also about perception, and the company’s name change is part of that process, he said.

Cost-cutting initiatives have made some impact and the cash burn rate has been cut by nearly 35 per cent, Kaji observed.

Accumulated losses at the end of last fiscal were ₹1,600 crore and the position may worsen this fiscal before things improve, he added.

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