Financial Services Conglomerate Invests in Bharati

Edelweiss Asset Reconstruction Company (ARC) has acquired 70 percent of India’s Bharati Shipyard’s debt as part of a plan to revive the struggling yard. While Bharati is about $800 million in debt, ARC is attracted to the yard’s strong order-book. Bharati has a backlog of more than 60 vessels and expects to complete 21 of them in the next 18 months. The 21 vessels are expected to generate more than $200 million in revenue.

Bharati Shipyard was once India’s second-largest private shipbuilder, but announced it had become a “sick firm” in late July. Shipping analysts attribute Bharati’s decline to its 2009 acquisition ofGreat Offshore Ltd oil services firm.

Bharati had set its sights on entering the lucrative business of supplying ships to the offshore oil industry and believed purchasing Great Offshore would help achieve that aim.

Great Offshore had a fleet of 41 vessels at the time, 16 of which were capable of servicing the deepwater oil exploration market, which commands premium charter rates. In addition, 14 of Great Offshore’s ships were built by Bharati.

But the offshore oil industry’s downturn dashed Bharati’s hopes, and the company is currently indebted to a consortium of 23 banks.

ARC is one of India’s leading financial services conglomerates. The company acquires non-performing assets from financial institutions and develops resolution strategies. ARC’s first move will be renaming the company Bharati Defence and Infrastructure to align with its proposed business plan to build warships for India’s navy.