Presented by Santhosh

ABG Shipyard
Allegations and Scandal Unveiled
 About the company
• One of India's largest private sector shipbuilding companies.

• Established in 1985, it operated in the business of designing,

building, and repairing ships.

• Involved in constructing a wide range of vessels, including offshore

support vessels, bulk carriers, and warships.

• Founder: Rishi Agarwal

 The Shipping Industry
Cost per ship: 40 -100 Crores
Duration: 2-3 years

Charterer Shipping Shipyard

Company
Wants to rent a • Ship Maintenance Ship
ship to transport • Staffing
•
Manufacturer
goods or Port clearance
passengers • Marine Fuel
Early 2000's

• Globalization hit new peaks

• Rise in volume of trade
• Rise in Profits
• Ports enjoyed record revenues due to rise in
demand of all kinds of goods
• Shipyard received more orders
• Investor and banks pumped in money into
global container shipping business
Aftermath of 2008
• Demand fell
• Ships order were cancelled
• Huge working capital stuck in
unsold inventory

ABG Shipyard:
• 80% orders were from
international clients
• Lost these orders after 2008
Bank Loan
• Normally huge loan requirements are led by PSU (in consortium arrangement)
• In case of ABG, ICICI bank led the consortium (out of 28 banks)
• Money was lent between 2012-2017
• Average profits was only Rs.185 crores
• Difficult to repay interest let alone the principal
• Major part of loan given against assets of the company and remaining on
guarentee given by promoters
Current Assets If we exclude inventories
Inventories 3,260.83 the current liabilities exceed
Trade Receivables 62.64 current assets by 2.49 times
Cash and bank balances 363.52
Short term advances 1,326.4
Other current assets 526.65
Analysis:
Total 5,540.04
The company did not have
Current Liabilities
funds to repay its current
Short term borrowings 2,008.68
liabilities
Trade Payables 1,083.14
Yet banks loaned huge funds.
Other current liabilities 2,563.45
Short term provisions 40.37
Total 5,695.64
 01. 02.
Account classified as Happened through shell
NPA in 2016. companies in tax haven
Led to Money
Laundering
The ABG countries.(Keeps details
secretive)

Shipyard SCAM
04.
03. 16 shell companies. Loan
Such money is used to money was diverted to
buy real estate etc and these accounts. EY
owners can enjoy a appointed to conduct
lavish life forensic audit
 April 2018 Feb 2022
EY appointed to conduct CBI filed an FIR
forensic audit

2019 News broke out to the world

Banks filed complaint
 Senior banker who led Lessons
the consortium said:
Read a lot about the scams, you will

01.
learn the intricacies that we don’t
“The damage is done and is already factored in. I don’t know about the industries.
expect any further shocks from this episode for banks”

Don’t do scams

02.
Thank you very
much!