On account of lower subsidies, ABG Shipyard saw pressure on margins in Q4. The subsidy contribution from the government is expected to be better in FY12. D Datar, CFO of ABG Shipyard tells CNBC-TV18 that the lag was mainly due to servicing the Coast Guard which does not draw subsidy. The project is nearing completion, and hence, the subsidy is expected to go up, he says.
The current orderbook of the company stands at Rs 15000 crore. ABG delivered 16 vessels in FY11, the highest delivery by any yard in India. It expects to deliver 20 more in the current fiscal.
As for debt on books, ABG has reduced its debts by Rs 506 crore to Rs 2391 crore. The management said that it is aiming to reduce it by another Rs 400 crore in FY12.
Below is the verbatim transcript. Also watch the accompanying video Q: Your sales are okay but there is some pressure on your EBITDA level and your margins. Can you take us through why?
A: We booked a subsidy of Rs 182 crore last year and this year, we have booked only Rs 82 crore. This means, less subsidy by Rs 100 crore. Therefore, if you calculate EBITDA without subsidy for both the years, we have improved the EBITDA margin. Q: What are you expectations for subsidy in FY12 because that is been a bit of a swing factor in your earnings?
A: Last year, we were more focused on completing our order book for Coast Guard which does not attract subsidy. However, this year, we are almost out of the Coast Guard order book. Hence, most of the orders that we are producing this year will be subsidy enabled. It
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