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Chetan Mehra quits great offshore board

Bharati Shipyard had acquired Great Offshore in 2009 and Chetan Mehra was widely seen as instrumental in the acquisition.

, ET Bureau|
Updated: Dec 26, 2011, 04.31 AM IST
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MUMBAI: More than a year after being elevated to the board of directors at Great Offshore, Chetan Mehra, the son-in-law of chairman, PC Kapoor, resigned from the board on Friday.

Bharati Shipyard, promoted by PC Kapoor and Vijay Kumar, had acquired Great Offshore in 2009 and Chetan Mehra was widely seen as instrumental in the acquisition.

Mehra, who was appointed as a director at Great Offshore in February last year, was later elevated as an executive director in September this year. In December, he resigned as executive director of the company, but decided to stay on as a director in the debt-laden offshore major.

"I would now like to devote more time with Weizmann, a company I have been closely related with. Great Offshore has a professionally managed team, who are competent enough. But, I cannot predict at the moment, when I will return to the company," Mehra told ET.

The resignation has raised eyebrows about the future of Great Offshore and has put the succession plan in jeopardy, a claim which Kapoor refutes. "Chetan will always be available for consultation. He wanted to concentrate on his business, but there are no serious concerns," he said.

In an interview to ET last year, Kapoor had said a succession plan was put in place at both Bharati Shipyard and Great Offshore. Mehra was widely seen as a successor to Kapoor.

"Chetan and Sukriti (Vijay Kumar's daughter) will play multifarious roles in the group as part of succession planning. No matter how big a family-controlled business is, it needs to have a corporate structure," Kapoor had earlier said.

Bharati Shipyard had acquired controlling stake in Great Offshore after a bitter corporate battle with ABG Shipyard. Bharati had to pay more than Rs 1,000 crore to acquire the stake, a move widely seen as a reason for its debt trouble.

A top official at a rival company said Mehra's resignation from the board of Great Offshore is aimed at protecting Weizmann as Great Offshore is likely to go for corporate debt restructuring in coming months.

"As the banking sector witnesses increased default by corporates, being on board of Great Offshore, a company heavily in debt, may not help in fund raising plans at his own company. If he remains on board of Great Offshore, banks may not be willing to give funds for Weizmann," the official said. Lenders of Bharati Shipyard are set to restructure loans close to Rs 3,900 crore. On Friday, credit rating agency CRISIL downgraded the long-term loan facility at Great Offshore, citing a delay in delivery of new rigs.

Great Offshore is scheduled to redeem $40 million foreign currency convertible bonds in October 2012, but analysts say the company is unlikely to redeem it as cash flow has been severely affected.

"Great Offshore's debt has been consistently rising and this level, we are very concerned about how they will redeem the FCCB on time. Their stock price has fallen by more than 80% this year and the conversion rate is now more than six times current stock price," an analyst with a leading brokerage said.
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