Aban Offshore Navigates Complex Insolvency Path Amidst Settlement Hopes
Aban Offshore Limited, a key player in India's offshore drilling services sector, remains deep in its Corporate Insolvency Resolution Process (CIRP). The latest development comes from the National Company Law Appellate Tribunal (NCLAT), Chennai, which has pushed back a crucial hearing to March 27, 2026. This delay is intended to provide space for potential settlement discussions between the company's appellant, Reji Abraham (the suspended MD), and its primary creditor, Punjab National Bank (PNB).
Financial Deep Dive
The company's financial health has been severely compromised, leading to its current CIRP status, initiated by an NCLT order on September 1, 2025, following a petition by Punjab National Bank for a default of ₹366.09 crore. Admitted claims from financial creditors stand at a substantial ₹1,191 crore, with PNB accounting for the majority at ₹1,077 crore. Financial statements reveal a dire picture: a debt-to-equity ratio of -60.6% due to negative shareholder equity, an interest coverage ratio of a mere 0.1, and significant contingent liabilities of ₹1,269 crore. The company has also reported a consistently negative profit after tax over the last five years, with a sharp decline in revenues and sales growth over the past decade.
Auditors have issued a 'Disclaimer Conclusion' on the latest unaudited financial results for the quarter and nine months ending December 31, 2025. This means they could not obtain sufficient appropriate audit evidence to form an opinion on the fairness and accuracy of the numbers, significantly undermining their reliability. This audit concern adds another layer of risk to an already precarious situation, making it difficult for stakeholders to assess the company's true value or recovery prospects.
Risks & Outlook
The primary risk for Aban Offshore and its stakeholders is the potential for liquidation if a viable resolution plan is not approved. The ongoing CIRP signifies severe financial distress, threatening shareholder value. The NCLAT's intervention regarding a One-Time Settlement (OTS) proposal with PNB highlights the contentious nature of debt resolution. Aban Offshore's suspended MD claims PNB failed to consider the OTS as directed, while PNB asserts it was considered and rejected. The NCLAT is demanding clarity from PNB on this matter, with the next hearing scheduled for March 27, 2026. An interim order from January 21, 2026, remains in effect, providing a temporary, albeit uncertain, reprieve.
Furthermore, the company has ₹281 crore worth of non-convertible redeemable preference shares that have remained unredeemed since 2014, adding to the long-standing financial obligations. Historically, the company has faced challenges due to declining fleet utilization, falling oil prices post-2014, and the impact of the pandemic.
Peer Comparison
Aban Offshore operates in the offshore drilling services sector, which includes players like Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL), and Jindal Drilling & Industries Ltd.. ONGC and OIL are large public sector undertakings with dominant market shares and diversified operations. Jindal Drilling & Industries Ltd. is a private sector player focusing on shallow and deepwater drilling. In comparison, Aban Offshore is currently in a critical insolvency process, significantly impacting its operational capacity and market standing. Competitors like Dolphin Offshore and Aakash Exploration also operate in this space, but Aban's CIRP places it in a uniquely precarious position. While other offshore support solution drilling companies are listed, Aban's direct market comparison is severely hampered by its insolvency proceedings. Aban Offshore has shown significantly lower returns compared to its peers over the last several years, with its share price declining by approximately 46% over the past year.
Investor Concerns
The company's negative book value of ₹-4,605 per share and negative shareholder equity of ₹-268.8 billion highlight the dire financial state of Aban Offshore. The prolonged CIRP, coupled with the auditor's disclaimer conclusion, raises substantial doubts about the company's future viability and the recovery prospects for its investors and creditors.