Rise and fall of Gujarat’s ABG Shipyard, now under probe for fraud
- CBI recently booked ABG Shipyard, its directors, and ABG International Pvt Limited for allegedly causing losses of Rs 22,842 crore to a consortium of 28 banks.
A decade of losses
- Until the end of 2012-13, ABG Shipyard was thriving, with a net profit of Rs 107 crore
- By March 2016, its net loss had amounted to Rs 3,704 crore
- Revenues had fallen to Rs 37 crore, from Rs 401 crore a year earlier.
- The company undertook a debt restructuring exercise in 2013-14.
- In its annual report that year, it cited the cancellation of new ship/vessel orders, reduced lending from banks, high borrowing cost, low capacity utilisation of the Dahej shipyard in Surat, and the expiry of the Centre’s shipbuilding subsidy scheme in 2007.
Growth
- Registration: ABG Shipyard Ltd was incorporated as Magdalla Shipyard Pvt Ltd in March 1985.
- It became ABG Shipyard Pvt Ltd in May 1995 and ABG Shipyard Ltd in June 1995.
- Between 1990, when it delivered its first ship, and 2013, it built over 165 ships, 80% of them for international customers.
- In 2000, it got its first government order to build two inceptor boats for the Coast Guard
- 2011: Centre gave it a licence to build defence ships including submarines.
- By February 2012, ABG Shipyard had an order book of Rs 16,600 crore.
- Its main shipyard was spread over 35 acres on the banks of the Tapi in Magdalla, Surat.
Acquisitions & subsidiaries
- ABG Shipyard acquired UAE-based Crossocean Ship Repair Limited, FZE, Fujairah in 2006, but sold it off in March 2008.
- In 2007-08, ABG acquired Vipul Shipyard adjacent to its Magdalla shipyard.
- A key acquisition was of Western India Shipyard Limited (WISL), Goa, through a deal with ICICI bank and other lenders.
Seizure and liquidation
- 2007: ABG Shipyard signed Rs 50-crore MoU for a maritime university.
- Gujarat Industrial Development Corporation (GIDC) recently took possession of 1.21 lakh sq m land allotted in Icchapore, Surat, for the university.
- The plot had been allotted at 50% less of the prevailing premium price of Rs 1,400/ sqm
- CAG had also found the Gujarat Maritime Board (GMB) not taking action against the shipbuilder for non-payment of lease rental.
- In an order on April 25, 2019, in ICICI Bank vs ABG Shipyard, the National Company Law Tribunal (NCLT) ordered the liquidation of the company under Section * 33 of the Insolvency and Bankruptcy Code.
- In December 2020, the NCLT’s Ahmedabad bench allowed the liquidator to carry out the private sale of assets after an auction found no bidders