Once one of India’s largest shipbuilding companies, ABG Shipyard is touted to have carried out the country’s largest bank scam, more than Vijay Mallya and Nirav Modi combined. On February 12, the Central Bureau of Investigation (CBI) registered an FIR against the company and its former chairman and managing director Rishi Kamlesh Agarwal along with others for allegedly cheating a consortium of banks led by State Bank of India of over Rs 22,842 crore. While there is speculation about whose fault it was, which government is to blamed, how so much credit was given out to the company and how much of the amount was actually syphoned off and more, staff and workers of the company have not received their dues for three years of work, even with the company going into liquidation.
Sunil Kumar Jain, 63, was working at ABG Shipyard’s plant in Dahej, Gujarat from 2008 — and was hoping to retire from the company with his provident fund (PF) and gratuity amounts that he would receive. Instead, he is now the main petitioner on behalf of 467 staff members in demanding their dues from the company. Employees have filed applications with the National Company Law Tribunal, the National Company Law Appellate Tribunal, and the Supreme Court.
“We haven't been paid in five years (for the period 2016-2019). Employees are suffering and some of the employees and petitioners of our suit have also expired due to COVID-19. Not receiving our dues is mental agony,” Sunil says, “Workers have not been paid their wages, salaries, gratuity, PF — no full and final settlement was done. We are not discharged or removed from our jobs properly. No work experience certificate, relieving letter or salary certificate was given. Our salary dues are outstanding. We have been denied our legitimate dues.”
“The total dues to employees is barely half a percent of the Rs 22,800 crore debt owed by ABGSL,” another employee who wishes to remain anonymous says. “However, the lender banks, most of which are government-owned, the Insolvency and Bankruptcy Code (IBC) and the legal process have provided no means yet for the employees to realise the dues.” The employee tells TNM that they were given full assurance that whenever the company was eventually sold or liquidated, they would get their dues.
“That was the assurance with which people continued working with whatever difficulties they had. They took debt from wherever they could, sold whatever property they had and managed. People served in this company because it was the largest shipbuilding company in the country. No one ever thought that this would shut down. We thought it may change hands but nobody ever expected it would shut down,” the employee says.
Sunil says several people had taken out loans and have pending EMIs, which they believed they would be able to pay off because they had a stable job with a large shipbuilding company. Instead, they have been pushed deeper into debt.
Even on the day the company went into liquidation, the employee quoted above claims that ABG had Rs 2000-crore worth of hard assets that could be sold. “It’s assets you can see. People thought it would be sold and they would be paid,” he says. ABG went into liquidation in 2019 and the employees stopped receiving their dues in mid-2016. Employees are yet to receive any money.
ABG Shipyard was initially incorporated in 1985, and is the flagship company of the ABG group, with shipyards in Dahej and Surat. The company has built ships for the Indian Navy as well as the Indian Coast Guard. At one point, ABG Shipyard had India’s shipbuilding industry’s biggest order book in the private sector.
In 2013, ABG started having financial troubles and began defaulting on its loans. The company’s lenders also approved a loan recast under the Corporate Debt Restructuring Scheme. The company was given loan moratoriums and credit facilities as well. According to SBI’s complaint, due to the downturn in the shipping industry, the restructuring milestones in 2015 could not be met and it failed. In December 2015, lenders tried to further restructure it under the Strategic Debt Restructuring Scheme, where lenders could convert their debt to equity.
In July 2016, ABG Shipyard was declared as a Non-Performing Asset from November 2013 onwards. By October 2016, ABG Shipyard’s lenders had acquired 49% of the company. Meanwhile, during this period, the operations of the company continued.
In August 2017, the Ahmedabad bench of the National Company Law Tribunal admitted the application of ICICI Bank, the lender with the largest exposure, for insolvency resolution of ABG, and a resolution professional was appointed. This process of resolution — also known as the Corporate Insolvency Resolution Process (CIRP) — is where the company’s creditors are allowed to take control and recover their debt. The job of the resolution professional is appointed as a representative of the NCLT and is to help decide whether to revive the committee or to liquidate it. ABG did go into liquidation, where its assets are to be sold off and pay the people it owes. As per the Insolvency and Bankruptcy Code, when a company is liquidated, insolvency resolution costs and liquidation costs are given the first preference, followed by workers’ dues for the last two years and secured creditors, after that employees' dues for the last year are given, and the rest follows.
Employees TNM spoke to say that as of August 2017, dues had not been paid for anywhere between 14 and 17 months.
Staff members who worked in the organisation’s Mumbai office say that they stopped receiving their salaries around June 2016. Workers in yards received salaries for a few more months, but then this stopped as well. On some occasions, those in management received a portion of their salaries.
A longtime employee of the company who did not want to be named, with over Rs 20 lakh in pending dues, says that once the lenders took control of the company, they were told to come to work and that they would be paid eventually. “The resolution personnel also came but we didn’t get paid anything. They were being paid. They were selling things. They were getting the money from projects that had been delivered. But, we didn’t get paid a single rupee.”
“I wonder whether I'll ever get it while I'm alive. Nobody is bothered about us,” the employee says, adding that since they had been there for so long, it is even harder to find jobs once one is above 45-50 years of age.
Employees say that all the news surrounding the company and the ongoing case only cares about the amount due to the banks. “No one is worried about the employees or what the employees are going through,” the employee says.
One employee says that they have knocked on the doors of the lower courts, higher courts as well as the Prime Minister’s office, but to no avail.
By the time operations were wound up in 2019, only 30-odd employees remained in the Mumbai office.
As per employees on roll until liquidation, their unpaid dues stand at Rs 104.23 crore — Rs 33.29 crore during the period of the corporate and strategic debt restructuring, Rs 54.13 crore for the corporate insolvency resolution process (CIRP) period, and Rs 16.81 crore in PF and TDS (tax deducted at source) that was not deposited by the company.
When the company goes into liquidation, the employees are supposed to file claims to receive their dues. Eight hundred and seventy three employees and ex-employees submitted claims of Rs 113.62 cr, of which Rs 88.73 cr was verified and accepted. This, however, excluded the Rs 16.81 cr of PF and TDS dues.
In addition to not receiving their salaries, tax deductions and provident fund contributions that were deducted from employee salaries were never deposited with the authorities.
One of the employees says that the employer's contribution to the provident fund had not been deposited from November 2014 to May 2016. In addition, the employee contribution to the fund was deducted from the salary between August 2015 and May 2016 as well, but the same was not reflected with the Employees' Provident Fund Organisation. The tax deduction that was made from employee accounts for one year also was not deposited with the government.
In fact, the company let go of 30-40% of its employees in 2015 — and did not deposit their PF contributions either.
“There was a restructuring where almost 30-40% of surplus people were identified and told to go but for the remaining, they told us that we were required and will continue to be required unless we were told otherwise. And then, nobody ever said that these people are not required,” says one of the employees.
Workers at the Dahej yard – where Sunil worked – which is about 50 km from Bharuch city, were usually taken to the yard by a bus, for which money was deducted from their salaries. In 2018, when the company was under CIRP, Sunil tells TNM that while employees were required to report to work every day; unpaid bills kept piling which led to the yard’s electricity and water supply being cut. The payments to the transportation company also stopped, after which employees were on their own to get to the workplace as well. “We were incurring expenses from our own pocket without getting salaries,” he says.
But after operations ceased in April 2019, Sunil says that things have only taken a turn for the worse as they did not receive their salary certificate or experience certificate. Because of this, several workers, he says, have not been able to find other jobs of equal calibre, and have been forced to take contract jobs that pay significantly less than what they were previously earning.
According to him, they were told that they can’t be paid for the pre-CIRP period as the promoter absconded and was insolvent. He adds that at least for the period where the resolution professional was in charge, he was responsible to pay them their salaries for that period.
“I'm 63. I was thinking that I will retire from this job, get good PF, gratuity, and pension too as I served for over 10 years continuously. Now, I find myself at this age where I can't find a job because of my age. I haven’t received my PF or gratuity, and haven’t been able to repay my housing loan instalments,” he says.
In the Dahej yard alone, 246 workmen have claimed outstanding dues with the NCLT. Both NCLT and later NCLAT disposed of the employees’ application, giving them no relief. The application filed by Sunil and other employees in the NCLT said the average monthly wages of a workman stood at Rs 11,343, and the average salary of employees stood at Rs 40,673.
“In most of the families of the workers, they are the sole breadwinner. It is submitted that, the otherwise precarious financial condition in some of the families of workmen is further adversely affected on account of such continuous and recurrent defaults of payment of salaries and extremely grave and serious crisis prevails in the families of the employees,” the application reads, adding that they couldn’t even afford basic household necessities.
Now, they have gone to the Supreme Court and filed a plea against the resolution professional Sundaresh Bhat as well as the Consortium of Creditors. The Supreme Court has reserved its judgement on the matter.
Apart from those directly impacted, one of the employees quoted above says that there were about 4,000-5,000 vendors who were contracted, who had also been impacted by this. Now, employees believe that their cause will be lost.
“Nobody is even talking about employees. Employees plus their dependents and a lot of small petty contractors and vendors who were to supply the goods, are all lost from the system. It is only between the banks and the law enforcement agencies. There is nothing for the people who are actually there in the company who were working. The whole thing is a battle between the banks, the law enforcement agency and promoters,” he says.
“The entire system has forgotten that people do matter.”