Welspun wins bid for ABG Shipyard

23 Sept 2022 , 03:17 PM

Welspun Corp Limited's winning bid of Rs 659 crore has sparked expectations of the liquidation process under the Insolvency and Bankruptcy Code even as the interested parties seek clarification on the Enforcement Directorate (ED) attaching assets of the distressed borrower ABG Shipyard (IBC).

Welspun Corp Ltd's winning bid is one of the biggest among the properties up for sale, according to sources in the National Company Law Tribunal (NCLT) Ahmedabad bench and the legal community. According to a source who spoke on the record under the condition of anonymity, "While clarity is being sought with regard to ED seizing ABG Shipyard assets, the winning bid augurs favorably for creditors even under the liquidation process given it is one of the largest."

The move bodes well for the state's ports and shipbuilding industry, according to representatives of the Gujarati government. "In accordance with the new 2019 strategy, the state has been attempting to strengthen the industry by considering how to draw both domestic and foreign enterprise. The operations won't suffer as a result of this asset sale, which may even benefit in achieving the policy's objectives "a senior government official stated.

After RBI instructed its creditors to send their claims to NCLT for resolution, ABG Shipyard entered liquidation after no bidders were identified throughout the insolvency procedure. Following an order from the Supreme Court (SC) on August 26, 2022 to complete the sale within four weeks, the ABG Shipyard liquidator recently opened bids for the sale of certain assets.

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 industry, successfully bid on the distressed borrower's assets, which are spread across 165 acres of leasehold land with 1,000 metres of water frontage.

The former is now trying to maximise the value of the ABG Shipyard facility after spending Rs 589 crore through Welspun Corp Limited and Rs 70 crore through subsidiary Nauyaan Shipyard. The plan put up by Welspun called for utilising the ABG Shipyard's resources for shipbreaking, ship repair, green steel, and commercial shipbuilding, among other things.

The yard in Dahej has a number of important facilities, including the biggest ship lift system in the world, which has a 33,000 metric tonne capacity, and a ship transfer system with a fluidized bed, which is only half finished and has a 27,000 MT capacity.

However, Welspun Corp noted in its statement with the public markets on Thursday that the anticipated weight of the partially constructed old ships and junk purchased under the successful offer is above approximately 150,000 metric tonnes. It said that when the transaction was finished, "it is anticipated that its potential value will be unleashed within 12 to 15 months."

Furthermore, Welspun Corp promised to take "necessary action" despite the fact that the IBC gave assets sold during liquidation protection by prohibiting investigating authorities from seizing or attaching them. Welspun Corp did not respond to an email till the time of writing. In response to charges that the founders had committed bank loan fraud, the ED had attached a number of assets, including shipyards, land, commercial buildings, and bank deposits totaling more than Rs2700 crore.

The Central Bureau of Investigation (CBI) earlier on Tuesday detained ABG Shipyard promoter Rishi Agarwal on suspicion of money laundering after numerous creditors filed claims totaling Rs22,059 crore. The State Bank of India (SBI), whose outstanding loan portfolio to ABG Shipyard totals Rs2,400 crore, submitted a complaint that led to Agarwal's detention.

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