Welspun bid for ABG Shipyard among highest for assets under liquidation

Gujarat govt welcomes the winning offer which could boost ship building activity under the new 2019 port policy

Even as the concerned parties seek clarity on the Enforcement Directorate (ED) attaching assets of the distressed borrower ABG Shipyard, Welspun Corp Limited's winning bid of Rs 659 crore has raised hopes of the liquidation process under the Insolvency and Bankruptcy Code (IBC).

According to sources in the National Company Law Tribunal (NCLT) Ahmedabad bench and legal fraternity, Welspun Corp Ltd's winning bid is one of the highest among assets under liquidation.

"While clarity is being sought with regards ED attaching ABG Shipyard assets, the winning bid augurs well for creditors even under the liquidation process since it is one of the highest," said a source on condition of anonymity.

According to Gujarat government officials, the development augurs well for the state's ports and ship building sector as well. "Under the new 2019 policy, the state government has been trying to boost the sector by looking at ways to attract domestic and international business. With this sale of assets, the operations will not take a hit and could potentially help achieve the targets set under the policy," said a senior government official.

ABG Shipyard had gone under liquidation after no buyers were found during the insolvency process after RBI had directed its creditors to refer to NCLT for the resolution process. ABG Shipyard liquidator had recently invited bids for sale of specified assets following a Supreme Court (SC) order on August 26, 2022 to conclude such a sale within four weeks.

Spread across 165 acres of leasehold land with 1,000 metres of water frontage, the distressed borrower's assets were successfully bid by Welspun Corp and its wholly owned subsidiary Nauyaan Shipyard Private Limited, which is being used as a special purpose vehicle for organic or inorganic growth in the marine field.

Having paid Rs 589 crore through Welspun Corp Limited and Rs 70 crore through subsidiary Nauyaan Shipyard, the former is now looking to unlock the ABG Shipyard asset's potential. Welspun's proposal entailed using ABG Shipyard's facilities for defence, commercial shipbuilding, green steel, ship breaking and ship repair, among other things.

Among the key facilities, the yard at Dahej includes the world's largest ship lift system with a capacity of 33,000 metric tonnes, and a partially completed ship transfer system with fluidised bed of 27,000 MT capacity.

However, in its filing with the stock exchanges on Thursday, Welspun Corp stated that the partially built obsolete ships and scrap acquired under the winning bid is estimated to be over roughly 150,000 metric tonnes. "It is estimated that its potential value would be unlocked within 12-15 months from completion of the acquisition," it stated.

Further, Welspun Corp stated that it would take "appropriate action" even as the IBC provided immunity to assets sold under liquidation by disallowing investigative agencies from attaching or confiscating the same. An emailed query to Welspun Corp remained unanswered till the time of writing.

On its part, the ED had attached multiple assets including shipyards, land, commercial properties and bank deposits amounting to over Rs 2700 crore, following bank loan fraud allegations against the promoters.

Earlier on Tuesday, ABG Shipyard promoter Rishi Agarwal was arrested by the Central Bureau of Investigation (CBI) based on money laundering allegations with claims of Rs 22,059 crore being made by multiple creditors.

Agarwal's arrest follows a complaint filed by the State Bank of India (SBI) whose outstanding loan portfolio to ABG Shipyard stands at Rs 2,400 crore.