Established in **1981**, Hariyana Ship Breakers Limited (**HSBL**) is a Bombay Stock Exchange (BSE) listed maritime and industrial firm. While its historical core competency lies in ship recycling and ferrous metal trading, the company has undergone a strategic transformation. It now operates as a diversified holding-style entity with significant capital allocated toward real estate development and industrial gas manufacturing. --- ### **Core Business Segments & Operational Infrastructure** HSBL evaluates its performance through two primary geographic and functional segments: **Bhavnagar** (Ship Breaking & Trading) and **Mumbai** (Investments & Management). * **Ship Recycling & Dismantling:** The company operates a specialized yard at **Plot No. 14, Alang-Sosiya, Gujarat**, on a **4,185 sq. m** plot leased from the **Gujarat Maritime Board (GMB)**. The facility extracts scrap metal for the domestic steel industry and is compliant with **IMO Resolution MEPC. 210(63)** and the **Hong Kong International Convention 2009**. * **Industrial Oxygen Production:** Through its **95%** owned subsidiary, **Hariyana Air Products**, the company manufactures industrial oxygen, a critical input for the gas-cutting processes used in ship dismantling. * **Metal Trading:** HSBL engages in the trading of **HR Coils**, ferrous and non-ferrous metals, and industrial inputs such as graphite electrodes. * **Real Estate & Capital Allocation:** The company utilizes surplus funds to invest in large-scale redevelopment projects through a network of associates and partnership firms. --- ### **Corporate Structure & Strategic Investments** Following a management split, HSBL operates as a standalone entity, independent of Hariyana Ship Demolition Private Limited or Inducto Steel Limited. Its value is heavily tied to its investment portfolio: | Entity Type | Name | Ownership / Interest | | :--- | :--- | :--- | | **Subsidiary** | **Hariyana Air Products** | **95%** | | **Associate** | **Goyal Hariyana Realty** | **50%** | | **Associate** | **Whitefield Projects** | **40%** | | **Associate** | **Orchid Lakeview Developers** | **33.33%** | | **Associate** | **Swastik Developers** | **33.33%** | As of **December 2025**, capital contributions to these partnership firms totaled **Rs. 140.27 Crores**, representing **83.71%** of the company’s total assets. --- ### **Strategic Growth Drivers & Macro Alignment** HSBL is positioning itself to capitalize on India’s structural maritime and infrastructure reforms, specifically targeting the following national benchmarks for **FY 2030-31**: * **National Steel Policy 2017:** Aiming for a total steel production capacity of **30 crore tonnes** and increasing per capita consumption from current levels to **158 kg**. * **Maritime India Vision 2030:** Supporting the government’s plan to double Alang’s recycling capacity from **0.45 crore LDT to 0.9 crore LDT**. * **Regulatory Arbitrage:** Leveraging the **Recycling of Ships Act, 2019** to attract global shipowners who require "Green Ship Recycling" standards to compete with emerging hubs in the Middle East. * **Policy Incentives:** The company is eligible for the **Shipbuilding Policy 2.0** recycling credit note scheme (offering up to **40% of scrap value**) and benefits from Gujarat’s **Rs. 28 crore** revival package, which includes a **50% reduction** in development charges. --- ### **Financial Risk Profile & Performance Summary** The company maintains a conservative capital structure with low external debt, though operational revenue has faced recent volatility due to vessel availability. **Key Financial Indicators (Standalone):** * **Net Worth:** **Rs. 146.87 Crore** (as of March 31, 2025). * **Gearing Ratio:** **0.11 times** (Total Debt/Tangible Net Worth). * **Interest Coverage Ratio:** **2.25 times**. * **Operating Income (FY25):** **Rs. 0.22 Cr** (a significant decline from **Rs. 148.63 Cr** in FY24). * **Profitability:** Despite operational losses in FY25, the company remained PAT positive (**Rs. 1.60 Cr**) due to **investment income**. **Liquidity & Debt Management:** The liquidity position is rated as **Adequate**, with expected annual cash accruals of **Rs. 5.45–5.80 Cr**. The company utilizes a policy of **full hedging** for foreign exchange risks associated with purchasing ships in USD on **180 to 360-day** credit terms. --- ### **Critical Risk Factors & Monitorables** #### **1. Asset Concentration & Liquidity Risk** Over **80%** of total assets are tied up in real estate partnership firms. Specifically, **Rs. 127.47 Crores** has been deployed as loans to related body corporates through these firms, raising concerns regarding the speed of recoverability and liquidity. #### **2. Audit Qualifications & Legal Disputes** * **Doubtful Advances:** Auditors have qualified their opinion regarding **Rs. 13.19 Cr** in non-provisioned advances for a non-commenced joint venture. This has resulted in an **overstatement of profit** and shareholder funds. Recovery efforts via the **Economic Offence Wing** began in **May 2025**. * **Contingent Liabilities:** * **Corporate Guarantees:** **Rs. 170.00 Cr** provided for group companies. * **Income Tax Disputes:** **Rs. 11.55 Cr** regarding expense disallowances. * **Property Tax:** Final notice of **Rs. 10.78 Lacs** from NMMC received in **January 2025**. #### **3. Market & Operational Volatility** * **Vessel Procurement:** Revenue is highly contingent on the successful acquisition of ships. Management expects a potential recovery in **FY2027** if 1-2 vessels are secured. * **Price Sensitivity:** Profitability is exposed to fluctuations in **Iron and Steel prices** and the **USD/INR exchange rate**. A **50 bps** increase in interest rates is estimated to impact PBT by approximately **Rs. 7.90 Lacs**. #### **4. Credit Rating Downgrade** In **March 2026**, Acuité downgraded the long-term rating to **'ACUITE BB'** from 'ACUITE BB+' citing subdued operating performance and limited financial flexibility. Further downward pressure may occur if net cash accruals fall below **Rs. 2 Cr**.