Alang Ship Breaking Corporation

Brickwork Ratings downgrades the long-term and short-term rating and simultaneously withdraws the ratings for the Bank Loan Facilities of Rs. 51.00 Crs. of Alang Ship Breaking Corporation

Particulars

Facilities/Instruments**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities/Instruments**	Previous	Present	Tenure	Previous (13 Nov 2024)	Present
Fund Based	(7.50)	(7.50)	Long Term	BWR BB- /Negative removal from ISSUER NOT COOPERATING* category/Upgraded	BWR B /Stable Downgrade/Withdrawal
Non Fund Based	51.00	51.00	Short Term	BWR A4+ removal from ISSUER NOT COOPERATING* category/Upgraded	BWR A4 Downgrade/Withdrawal
Grand Total	51.00	51.00	(Rupees Fifty One Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Complete details of Bank facilities / NCDs is provided in Annexure-I
RATING ACTION / OUTLOOK / WITHDRAWAL

Brickwork Ratings (BWR) downgrades the rating to BWR B/A4 with a stable outlook and simultaneously withdraws the rating with immediate effect for the bank loan facilities of Alang Ship Breaking Corporation.

The company requested the withdrawal of the rating and provided the necessary documents, including a formal withdrawal request letter, No Objection Certificate from SBI along with No Default Statement (NDS) for the past three months are held on record. The rating withdrawal aligns with BWR Rating Withdrawal Policy. The downgrade reflects the absence of updated operational and financial details.

KEY COVENANTS OF THE INSTRUMENT / FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

KEY RATING DRIVERS

Credit Strengths:

Locational Advantage :
The ship breaking yard is located at Alang-Sosiya belt which is one of the world’s largest ship-breaking clusters and constitutes almost 90% of India’s ship-breaking activity. The unique geographical features of the area include a high tidal range, wide continental shelf, adequate slope and a mud free coast. These conditions are ideal for a wide variety of ships to be beached easily during high tide. It accommodates nearly 170 plots spread over around 10 km long stretch along the seacoast of Alang-Sosiya.
Experienced Management :
The firm is promoted by Mr. Mahesh Patel, and other partners who has experience of more than three decades in the line of activity. The established presence and long-standing relationships with various stakeholders across the value chain have supported the performance across the business cycles. The promoters are well versed with the price dynamics of the ship-breaking industry which helps in buying ships at competitive rates depending on the prevailing market scenario.

Credit Risks:

Decline in scale of operations and financial risk profile: :
BWR is of opinion that the financial risk profiles remain the same. The company had achieved a total operating income of Rs. 16.97 crore in FY24, based on the last available financial information. Ship acquisitions were undertaken through Letters of Credit. However, during the preceding two years, the company had not been able to purchase any ships for recycling, which had adversely affected its scale of operations and financial performance.

The firm’s financial risk profile was assessed as moderate, characterised by a modest capital base of Rs. 13.47 crore and nil gearing, owing to the absence of outstanding LC-backed creditors as on 31 March 2024, primarily due to the non-availability of ships for recycling activity.
Profitability susceptible to fluctuations in foreign exchange rates and steel prices: :
As per the last assessed operating profile, it typically took around four to five months on average to completely dismantle a ship and generate revenue. Consequently, the firm was exposed to inventory risk for ships under the process of breaking due to the time lag between ship purchases and sale of scrap, particularly given the volatility in steel prices.

While the firm had mitigated a portion of foreign exchange risk through booking of forward contracts, it remained exposed to adverse movements in exchange rates. Operating profit margins were thin, driven by high raw material costs and vulnerability to steel price fluctuations. Accordingly, debt protection metrics were weak, with ISCR recorded at 0.38x in FY24 as compared to 2.19x in FY23.
Intense competition and regulatory norms: :
The firm operated in an intensely competitive environment, facing competition from both large and small players located in Bhavnagar as well as from neighbouring countries. The industry was subject to stringent pollution control regulations owing to the hazardous nature of materials such as asbestos, lead, and other chemicals contained in ships.

Additionally, the operating belt was highly regulated, with strict labour safety, working conditions, and environmental compliance standards required to be adhered to by ship-breaking entities.
Risk of withdrawal of capital: :
Owing to its partnership constitution, the firm carried an inherent risk of withdrawal of partners’ capital in the event of personal contingencies, and potential dissolution upon death, retirement, or insolvency of partners. Further, partnership firms had limited access to external borrowings, as lenders’ credit decisions were influenced by the credit profiles of the partners.

Capital withdrawal of Rs. 0.44 crore was recorded in FY24. However, based on historical trends, the promoters had extended support to the firm as and when required.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA - Standalone

For arriving at its ratings, BWR has considered a standalone financials of the company and applied its rating methodology as detailed in the Rating Criteria.

RATING SENSITIVITIES

Not applicable, as the rating mandate is being withdrawn with immediate effect at the request of the client.

LIQUIDITY INDICATORS - Stretched

Based on the last available information, BWR believes that the firm’s liquidity position remains to be stretched.
The firm had availed non-fund based foreign Letters of Credit and standby lines of credit for purchasing ships for ship-breaking activity, with tenors ranging from 120 to 300 days, along with a cash credit limit for other operational requirements. Net cash accruals were recorded at Rs. 0.45 crore, while cash and bank balances stood at Rs. 0.82 crore as on 31 March 2024. The average monthly fund-based utilisation and LC utilisation for the preceding twelve months stood at Nil, primarily due to the non-availability of ships for recycling activity. In the absence of updated information, liquidity is considered to have remained at similar levels as assessed earlier.

COMPANY's / FIRM's PROFILE

Macro Economic Indicator	Sector	Industry	Basic Industry
Industrials	Capital Goods	Industrial Manufacturing	Ship Building & Allied Services

Alang Ship Breaking Corporation is a partnership firm established in 1992 for carrying the activity of ship breaking. The firm has its registered office and plot is in Bhavnagar, Gujarat. The business operations are managed by Mr. Mahesh Patel and other three partners.The promoters are having experience of more than 30 years in this line of activity. The firm purchases the old ship/vessels for recycling and in the process it obtains various ferrous and non ferrous materials (mainly steel & iron) machinery, ship items etc which is sold in open market. The firm has dismantled more than 35 ships since 1992 imported from Japan, Poland, USA, China etc.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Unaudited - Annual)
Operating Revenue	Rs.Crs.	90.55	16.97	Not Available
EBITDA	Rs.Crs.	2.70	0.33	Not Available
PAT	Rs.Crs.	0.65	0.35	Not Available
Tangible Net Worth	Rs.Crs.	14.14	13.70	Not Available
Total Debt / Tangible Net Worth	Times	Not Available	Not Available	Not Available
Current Ratio	Times	34.67	19.91	Not Available

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY(IF ANY)

Not Applicable

ANY OTHER INFORMATION

NIL

RATING HISTORY FOR THE PREVIOUS THREE YEARS(including withdrawal and suspended)

Name of Instrument (NCD/Bank Loan /Non- Fund Based facilitates/ Commercial Paper etc.)	Current Rating (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
FB SubLimit	LT	(7.50)	BWR B/Stable (Downgrade/Withdrawal)	NA	NA	24Apr2024	BWR B+Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	25Apr2023	BWR BB- Stable (ISSUER NOT COOPERATING* /Downgrade)
		NA	NA	NA	NA	13Nov2024	BWR BB- Negative (removal from ISSUER NOT COOPERATING* category/Upgraded)	NA	NA
Non Fund Based	ST	51.00	BWR A4 (Downgrade/Withdrawal)	NA	NA	24Apr2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	25Apr2023	BWR A4 (ISSUER NOT COOPERATING* /Downgraded)
		0.00	NA	NA	NA	13Nov2024	BWR A4+ (removal from ISSUER NOT COOPERATING* category/Upgraded)	NA	NA
Grand Total		51.00	(Rupees Fifty One Crores Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Santosh S K Ratings Analyst santosh.sk@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com	Customer Support \| CustSupport@brickwrokratings.com

Alang Ship Breaking Corporation

ANNEXURE-I

Details of Bank Loan Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	State Bank Of India (SBI)	Letter of Credit - Sanctioned	_	50.00	50.00	Simple##
	Sub-Limit (Cash Credit) - Sanctioned	(7.50)
2	State Bank Of India (SBI)	Credit Exposure Limit (CEL) - Sanctioned	_	1.00	1.00	Simple##
Total			0.00	51.00	51.00
TOTAL (Rupees Fifty One Crores Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

ANNEXURE-II

INSTRUMENT(NCD/Bonds/CP/FDs) DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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