CBI books ABG Shipyard, its directors in the biggest bank fraud of Rs 22,842 cr

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CBI books ABG Shipyard, its directors in the biggest bank fraud of Rs 22,842 cr

ABG Shipyard Limited (ABGSL) one of India’s largest private sector shipyard firm, has been booked by the Central Bureau of Investigation (CBI) for defrauding 28 banks to the tune of Rs 22,842 cr.

It is one of the biggest bank fraud (bigger than Punjab National Bank scam involving Nirav Modi and Mehul Choksi) cases which the CBI will be investigating.

As per the FIR filed on complaint of State Bank of India (SBI), the forensic audit report revealed that from April 2012 to July 2017, the accused connived with each other and committed illegal activities including diversion of funds, misappropriation, and criminal breach of trust for purposes other than for which the funds were released by the bank.

ABG group is promoted by Rishi Agarwal, and has been a major player in the Indian ship building industry.

ABGSL has capacity to build vessels up to 18,000 dead weight tonnage (DWT) at Surat Shipyard and 1,20,000 DWT at Dahej Shipyard.

Global crisis has impacted the shipping industry. There was sufficient fall in commodity demand and prices and cargo demand. The cancellation of contracts for few ships and vessels piled up inventory. This led to paucity of working capital and increase in the operating cycle aggravating the liquidity problem and financial problem.

There was no demand of commercial vessels as the industry was on a downturn even in 2015. There was no fresh defense orders release in 2015. ABGSL was finding it very difficult to achieve milestones as envisaged in CDR. Hence it was unable to service the interest and instalments on due date.

ABGSL has been referred to NCLT (National Company Law Tribunal) of Ahmedabad bench which had allowed the official liquidator for the company to carry out a private sale of the assets.

ABGSL owes Rs 2,925 cr to SBI, Rs 7,089 cr to ICICI Bank, Rs 3,634 cr to IDBI Bank, Rs 1,614 cr to Bank of Baroda, Rs 1,244 cr to PNB and Rs 1,228 cr to Indian Overseas Bank.

Note - This article has been first published on LInkedIN on 12th February, 2022

To be continued