The company was sanctioned credit facilities from 28 banks and financial institutions led by ICICI bank, and State Bank of India with an exposure of Rs 2,468.51 crore.
CBI arrested Rishi Agarwal, former Chairman and Managing Director (CMO) of ABG Shipyard on Wednesday in connection to its probe into Rs 22,842 crore loan default by the company.
Central Bureau of Investigation had booked Agarwal, the then executive director Santhanam Muthaswamy, and directors Sushil Kumar Agarwal and Ravi Vimal Nevetia on February 7.
Agarwal was called for a questionnaire at the CBI headquarters during which he was found non-cooperative in the probe and was evasive in responses to the investigating officer, so he was then arrested as per the CBI spokesperson.
The CBI had registered the case on a complaint by the State Bank of India for the alleged offenses of criminal conspiracy, cheating, criminal breach of trust, and abuse of official position under the Indian Penal Code (IPC) and Prevention of Corruption Act.
The ABG SHipyard has been a major player in the Indian ship-building industry, operating from its shipyards located at Dahej and Surat in Gujarat with capacities to build up to 18,000 dead weight tonnage (DWT) at Surat and 1,20,000 at Dahej, an official said.
The company had witnessed a phenomenal rise by constructing 165 vessels in 16 years and started to show stress following a global slump in the shipping industry which brought irregularities in the repayment schedule.
The cancellation of contracts for a few ships and vessels resulted in piling up of inventory, which resulted in a paucity of working capital and a significant increase in the operating cycle, thereby aggravating the liquidity and financial problem, the complaint by SBI alleged.
A forensic audit was ordered by the lender banks when the loan accounts were declared non-performing assets in July 2016. The audit by Ernst and Young showed that the accused colluded together and committed illegal activities including diversion of funds, misappropriation and criminal breach of trust between 2012 and 2017, the official informed.