In a coordinated move, the Central Bureau of Investigation (CBI) has booked ABG Shipyard Limited, one of the India’s largest private sector shipyard firm and its directors for defrauding a consortium of 28 banks led by State Bank of India (SBI) to the tune of Rs 22,842 crore.
CBI officials said that along with the firm, which is into ship building and repair, its Directors Rishi Agarwal, Santhanam Muthuswamy and Ashwini Kumar have also been named as accused in the FIR that it registered on February 7 of this month.
It is pertinent to mention here that it is one of the biggest bank fraud — even bigger than Punjab National Bank scam involving fugitives Nirav Modi and Mehul Choksi.
According to the FIR filed on the complaint of SBI management, the forensic audit report revealed that from April 2012 to July 2017, the accused colluded with each other and committed illegal activities including diversion of funds, misappropriation, and criminal breach of trust.
The group is promoted by Agarwal and has been a major player in the Indian ship building industry.
ABG Shipyard Limited (ABGSL), has the capacity to build vessels up to 18,000 dead weight tonnage (DWT) at Surat Shipyard and 1,20,000 dead weight tonnage (DWT) at Dahej Shipyard.
ABGSL has constructed over 165 vessels (including 46 for export market) in the last 16 years including specialised vessels like newsprint carriers, self-discharging and loading bulk cement carriers, floating cranes, interceptor boats, dynamic positioning diving support vessels, pusher tugs and flotilla for leading companies in India and abroad.
As per CBI sources, ABGSL also had reportedly bagged contracts from Indian Navy to built ships in 2011. The contract was later terminated as the firm was struggling financially.
The FIR stated, “Global crisis has impacted the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand. The cancellation of contracts for few ships or vessels resulted in piling up of inventory. This has resulted in paucity of working capital and caused significant increase in the operating cycle, thereby aggravating the liquidity problem and financial problem.”
“There was no demand of commercial vessels as the industry was going through downturn even in 2015. Further, there was no fresh defense orders release in 2015. The company was finding it very difficult to achieve milestones as envisaged in CDR. Thus, company was unable to service the interest and instalments on due date,” it said.
The company has been referred to NCLT (National Company Law Tribunal) of Ahmedabad bench which had allowed the official liquidator for ABG Shipyard to carry out a private sale of the assets.
As per the FIR, the ABG shipyard owes Rs 2,925 crore to SBI, Rs 7,089 crore to ICICI Bank, Rs 3,634 crore to IDBI Bank, Rs 1,614 crore to Bank of Baroda, Rs 1,244 to PNB and Rs 1,228 crore to Indian Overseas Bank.
Several teams of CBI are conducting searches at the premises linked to the accused persons and more revelations are likely, sources in the probe agency said.
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