Aban Offshore Reports Widening Losses and Financial Distress in Q1

Aban Offshore Limited , a prominent player in the offshore drilling sector, has reported a significant deterioration in its financial performance for the first quarter ended June 30. The company's consolidated results reveal deepening losses and ongoing financial challenges, raising concerns about its ability to continue operations.

Financial Performance

Aban Offshore's consolidated revenue for Q1 stood at Rs 1,162.35 crore, marking a 24.20% decline from Rs 1,533.64 crore in the same quarter last year. The company's consolidated net loss widened to Rs 2,528.12 crore, compared to Rs 2,376.65 crore in Q1 of the previous year. Consequently, the loss per share increased to Rs 43.32 from Rs 40.72 year-over-year.

Standalone Operations

While the consolidated results paint a grim picture, Aban Offshore's standalone operations remained profitable. The company reported a standalone net profit of Rs 40.19 crore for the quarter. However, this positive performance at the parent company level was overshadowed by the group's overall financial distress.

Financial Challenges

The company faces severe financial challenges, with its consolidated net worth plummeting to a negative Rs 2,54,019.96 crore. This precarious financial position is further compounded by defaults on loan repayments and breaches of debt covenants, giving lenders the right to demand immediate repayment of borrowings.

Debt and Liquidity Concerns

Aban Offshore has defaulted on the redemption of non-convertible redeemable preference shares worth Rs 2,810 million, which were due for redemption on various dates between December 2014 and August 2016. The company has also failed to pay dividends on these preference shares since March 2015.

Going Concern and Management Response

Despite these challenges, the management believes that the use of the going concern assumption in preparing the financial results is still appropriate. The company is currently in discussions with its lenders to obtain approval for and implementation of an appropriate debt resolution plan. Management asserts that Aban Offshore will continue to operate in the foreseeable future.

Auditor's Concerns

The company's auditors have expressed concerns regarding the going concern status of Aban Offshore and its subsidiaries. They have also noted issues with obtaining bank balance confirmations for certain accounts and borrowings, which has limited their ability to verify the accuracy and completeness of these financial items.

Annual General Meeting Rescheduled

In light of these developments, Aban Offshore has rescheduled its 39th Annual General Meeting to September 24, to be held through video conferencing.

As Aban Offshore navigates through these financial turbulences, stakeholders will be closely watching the company's efforts to secure a debt resolution plan and improve its financial health in the coming quarters.