RATING RATIONALE

08Sep2025

Ashish Ship Breakers Pvt. Ltd

Brickwork Ratings removes the ratings from the Issuer Not Cooperating category, upgrades the long-term rating and reaffirms the short-term ratings for the Bank Loan Facilities of Rs. 50.00 Crs. of Ashish Ship Breakers Pvt. Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (03 Sep 2024)	Present
Fund Based	(8.00)	(10.00)	Long Term	BWR B-/Stable Continues to be in ISSUER NOT COOPERATING* category/Downgraded	BWR BB - /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Non Fund Based	50.00	50.00	Short Term	BWR A4 Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed	BWR A4 removal from ISSUER NOT COOPERATING* category/Reaffirmed
Grand Total	50.00	50.00	(Rupees Fifty Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) has taken a Standalone view of Ashish Ship Breakers Pvt. Ltd and essentially relied upon the audited financial results up to FY24, provisional financials for FY25 and projected financials for FY26 & FY27 along with information/clarification provided by the entity's Management.

The removal from issuer not cooperating classification for the ratings assigned to Ashish Ship Breakers Pvt. Ltd factors in its cooperation in submitting relevant financial data and necessary updates.

The rating factors in the vulnerability of profit margins due to volatility in the prices of steel, forex rates. Also, the firm is exposed to intense competition from a large number of players operating in domestic as well as international competitors and the regulatory risks due to environmental issues. The rating however is supported by the promoters extensive experience in the ship breaking industry, their financial backing, and the strategic location of the yard at Alang, Bhavnagar in Gujarat.

The outlook has been assigned as Stable as the rating factors the company’s established presence in the ship-breaking industry and management’s ability to procure vessels in line with industry cycles. With growing regulatory compliances, the company is equipped with domestic certifications.

KEY RATING DRIVERS

Credit Strengths:

Experienced Management :
Ashish H. Agarwal and Sonia Agarwal have over ten years of experience in the ship-breaking industry in the Alang-Sosiya belt, Bhavnagar, Gujarat. Their established presence and relationships with stakeholders across the value chain have supported consistent business performance. They understand the price dynamics of the industry, enabling them to purchase ships at competitive rates based on market conditions.
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.
Competition and Regulatory Compliance :
The firm faces competition from both large and small players in Bhavnagar and neighboring countries. The industry is subject to stringent pollution control regulations due to hazardous materials like asbestos, lead, and chemicals in ships. The company’s certifications, includes ISO 30000:2009 for ship recycling management and its approval from the Gujarat Enviro Protection & Infrastructure Pvt. Ltd. for waste management, as these credentials directly mitigate the high environmental and regulatory risks inherent in the industry, reducing the likelihood of operational shutdowns or financial penalties.
These certifications provide a competitive advantage in securing vessels from global ship owners who prioritize compliant "green recycling," thereby reducing the risk of business volatility.

Credit Risks:

Decline in Operations and Financial Risk :
The company has recorded an operating income of Rs.34.34 Crores in FY24. The company acquires ships using letter of credit and relies on unsecured loans for acquisition of vessel. The company's core operations do not generate sufficient profit to cover its financing costs. Ratios consistently below 1.0 indicate that cash flows from operations are insufficient to meet interest and principal repayment obligations. The company is reliant on non-operating income or external funding to service its debt.
Profitability and Market Volatility :
Dismantling a ship takes about four to five months, creating inventory risk due to the time lag between purchasing a ship and selling its scrap. This exposes the firm to fluctuations in steel prices and foreign exchange rates. While forward contracts are used to hedge risks, the firm remains vulnerable to adverse exchange rate movements. Consequently, the company's operating profit margins are inherently thin and volatile driven by the high cost of raw materials, forex risks and immense competition.

ANALYTICAL APPROACH - Standalone

BWR has adopted a Standalone approach while arriving at its ratings.

RATING SENSITIVITIES

Positive:
-- Sustained revenue growth, with Total Operating Income exceeding Rs.75 crore, driven by improved ship-recycling activity.
-- Consistent positive operating margins, with EBITDA margins maintained above 5%.
-- Strengthened debt coverage, with ISCR improving above 1.4x, supported by higher core operating cash flows.
-- Capital infusion by promoters or enhanced internal accruals, resulting in Total Debt / Tangible Net Worth below 1x.

Negative:
-- Inability to procure new ships for recycling, leading to sustained low Total Operating Income and EBITDA losses, threatening business sustainability.
-- Continued weak coverage indicators, including ISCR and DSCR, due to ongoing operating losses and limited internal accruals.
-- Increased debt-funded working capital or capex without proportional revenue growth, causing deterioration in gearing.
-- Further decline in revenue and profitability due to an unsustainable cost structure.
-- Sustained decline in the ship-breaking industry, impacting revenue visibility and profitability.

LIQUIDITY INDICATORS - Stretched

The company’s liquidity position remains moderately stretched as of FY24. Cash and bank balances stood at Rs. 0.27 crore, and net cash accruals were limited at Rs. 0.29 crore, indicating weak internal cash flow generation. However, the company’s average fund-based working capital utilization remained low at around 14% of the sanctioned cash credit limits, providing some liquidity buffer. Key liquidity ratios, such as the current ratio and quick ratio, remain at marginal levels as net cash accruals and modest profitability raise concerns to meet debt obligations. ISCR and DSCR were below unity indicating stretched operations.

ABOUT THE ENTITY

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

Ashish Ship Breakers Private Limited (ASBPL), part of the Bhavnagar-based "Ashish" Group, has been engaged in the ship breaking and scrap trading business since 1999. Promoted by Mr. Ashish H. Agarwal and Mrs. Sonia Agarwal, having experience of more than a decade in ship-breaking business. The company is engaged in the business of ship-breaking activity through plots allotted at Alang Shipyard by Gujarat Maritime Board (GMB). ASBPL acquires end of life vessels directly from owners or agents and dismantles them. Reusable items like machinery are sold to end-users, while the scrap metal is supplied to traders and manufacturing units

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Provisional - Annual)
Operating Revenue	Rs.Crs.	65.24	34.34	18.49
EBITDA	Rs.Crs.	2.92	-0.28	0.49
PAT	Rs.Crs.	0.20	0.22	0.08
Tangible Net Worth	Rs.Crs.	8.00	8.23	8.23
Total Debt / Tangible Net Worth	Times	1.07	0.68	1.29
Current Ratio	Times	1.17	9.38	1.31

KEY COVENANTS OF THE FACILITY RATED

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

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

ANY OTHER INFORMATION

Not available.

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

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
FB SubLimit	LT	(10.00)	BWR BB-/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	03Sep2024	BWR B-Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	05Sep2023	BWR B Stable (Continues to be in ISSUER NOT COOPERATING* category/Downgraded)	30Aug2022	BWR BB- Stable (Downgrade/ISSUER NOT COOPERATING*)
Non Fund Based	ST	50.00	BWR A4 (removal from ISSUER NOT COOPERATING* category/Reaffirmed)	03Sep2024	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	05Sep2023	BWR A4 (Continues to be in ISSUER NOT COOPERATING* category/Reaffirmed)	30Aug2022	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)
Grand Total		50.00	(Rupees Fifty 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

Ashish Ship Breakers Pvt. Ltd

ANNEXURE-I

Details of Bank 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	Punjab National Bank	ILC/FLC - Sanctioned	_	50.00	50.00	Simple##
	Sub-Limit (Cash Credit) - Sanctioned	(10.00)
Total			0.00	50.00	50.00
TOTAL (Rupees Fifty 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 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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