­Established presence of promoters in the ship recycling industry
BMPL has an established business presence of around four decades in the ship-breaking business, and the promoter family holds more than four decades of experience in the said business line. The business model entails acquiring old ships, dismantling them, and recovering the investment through the sale of scrap and parts. The long presence of management in the industry has resulted in the establishment of healthy relationships with its customers. The company has dismantled over 370 vessels, including submarines, and operates one of the largest yards in Alang. Its specialized infrastructure, such as the offshore crane capable of lifting heavy parts directly to the impermeable floor, enhances operational efficiency and environmental compliance, setting it apart from peers. The promoters are well versed in the price dynamics of the shipbreaking industry and have developed healthy relations with various ship aggregators, which helps in buying ships at competitive rates depending on the market scenario. Further, the company has successfully achieved a Statement of Compliance (SOC) for HKC from Class NK certification. Furthermore, the company was also able to get certification for EU SRR (European Union Ship Recycling Regulation) from Class NK. 

Acuité believes that the BMPL will continue to benefit from its experienced management and long track record of operation in the ship demolition industry.

Moderate financial risk profile
The financial risk profile of BMPL remained moderate, marked by a healthy net worth, low gearing, and moderate debt protection metrics. The tangible net worth stood at Rs.25.12 Cr. as on March 31, 2025 (Prov.) compared to Rs.23.44 Cr. in FY2024, reflecting gradual improvement. The company has minimal reliance on long-term debt, with gearing improving to 0.80 times in FY2025 (Prov.) from 0.93 times in FY2024. Debt protection metrics have moderated but remain adequate, with interest coverage ratio (ICR) at 1.93 times and DSCR at 1.13 times in FY2025 (Prov.), declined from 3.55 times and 2.88 times respectively in FY2024. While BMPL continues to rely on non-fund-based facilities like Letters of Credit (LCs) for procurement, the timely retirement of these obligations remains critical. Acuité believes the company’s financial risk profile will remain moderate, supported by its conservative capital structure and absence of major long-term debt.

Decline in Operating Performance and Profitability
BMPL’s operating performance has weakened significantly in FY2025 (Prov.), with revenue declining to Rs.154.48 Cr. from Rs.215.63 Cr. in FY2024. This drop is primarily attributed to the cessation of trading activities and the ship-breaking of comparatively smaller vessels during the year. The company also faced external headwinds such as elevated freight costs, which discouraged vessel owners from selling ships for scrap, thereby reducing business volume. Profitability was impacted, with operating margins turning negative at (0.62) per cent in FY2025 (Prov.) compared to 1.81 per cent in FY2024, due to volatility in raw material prices and a sharp decline in steel realizations. Although PAT margins remained positive at 1.09 per cent, they were supported by a one-time bonus, masking the underlying
Weakness in core operational profitability.

Acuite believes that BMPL’s operations may witness a gradual improvement over the near to medium term, supported by its ongoing ship-breaking activities and bids placed for additional vessels. However, the extent of recovery is expected to be modest, given the prevailing industry challenges and cautious market sentiment.

Moderately Intensive Working Capital Operations
BMPL’s working capital operations are moderately intensive, marked by an increase in Gross Current Asset (GCA) to 215 days as on March 31, 2025 (Prov.) as against 154 days in FY2024. This rise is primarily driven by a sharp increase in inventory days to 127, following the purchase of a large vessel worth Rs.52.11 Cr. in March 2025. Debtor days also increased to 18 days from 10 days in the previous year, while creditor days rose to 129 days from 86 days. The company’s reliance on working capital facilities remains moderate, with average bank limit utilisation for fund-based and non-fund-based facilities stood at 15.2 per cent and 41 per cent respectively for the last 12 months ended April 2025. Acuité believes that the working capital intensity will remain elevated due to the nature of ship-breaking operations and large inventory holdings.

Susceptibility of profitability to volatility in steel prices and fluctuations in foreign exchange rates
BMPL purchases ships ranging from 10,000 MT to 28,000 MT, which take around four to ten months to dismantle, depending on the tonnage of the vessel. During the dismantling period, the inventory buildup is significantly high. The prices of steel are fluctuating, and any adverse movement in the prices impacts BMPL’s profitability margin. The vessel purchase transaction is typically denominated in USD and is generally backed by 90- 360 days of letters of credit. Moreover, the scrap sales are typically in the domestic market, with realisations denominated in the Indian rupee. Consequently, BMPL remains exposed to any adverse movement in the foreign currency exchange rate. Any upward revision in the dollar-rupee exchange rate increases the purchase cost of the vessels. Though the group uses forwards to hedge its forex risk, the cover is taken based on management’s expectations for forex movement over a longer duration of LC, ranging from 90 to 360 days. Further, the company is also exposed to environmental and regulatory risk as the ship-scraping industry attracts considerable attention for issues relating to environmental pollution, health problems of the labourers, and violations of human rights.