Firm value of ABG Group Rs 450 crore, more than six times in a month

A valuation increase from Rs 450 crore to Rs 3,000 crore in less than a month – it is not a startup, but owned by ABG Cement Ltd, a sister company of the ABG Shipyard Ltd, victim of scamswhich the official liquidator attached to the Bombay High Court is trying to sell to help creditors recover the company’s money.

ABG Shipyard and ABG Cement, part of the ABG Group headed by Rishi Agarwal, are facing liquidation after defaulting on loan repayments to lenders.

In a filing in the Bombay High Court on December 8, 2021, the official liquidator had asked the court to order the Enforcement Directorate (ED) to clear the sale of a cement plant of ABG Cement based in Surat , which the agency had attached in January. 2021, following its investigation into the collapse of IL&FS. At the time of filing, the liquidator said he had found a buyer willing to pay Rs 450 crore for the plant, but the ED objected to the sale as the adjoining property was valued at Rs 952 crore . The Dec 22, 2021 ED asked the High Court not to allow the sale at such a low price.

Just a month later, in January 2021, the liquidator told the Bombay High Court that he had found another buyer for the same property for Rs 3,000 crore, more than six times more than the liquidator’s initial proposal and the court sought clearance from the ED for selling the property through the High Court. While the ED has informed the High Court that it will not prevent the sale if the liquidator can set aside the value of the attachment (Rs 952 crore) in favor of the agency in an interest-bearing FDR, the agency is likely to inquire with the official liquidator about the buyer and the sudden increase in valuation.

“It is surprising that within a month there is an increase in valuation from Rs 450 crore to Rs 3,000 crore. Who the new buyer is and why this sudden increase in valuation is something the ED will look into,” an official said on condition of anonymity.

VP Katkar is currently the official liquidator attached to the Bombay High Court.

A senior official in Katkar’s office said: ‘We have seen the affidavit filed by the ED and we are looking at how this type of appraisal was discussed while the appraisal report was kept in a sealed cover and that only the High Court judge is aware of the valuation report carried out by EY. We cannot comment further on the matter as it is subjudicial.

The Surat plant was attached by the ED after it was discovered that ABG Group had received 13 loans worth Rs 1,080 crore from IL&FS Financial Services (IFIN), the non-banking arm of the IL&FS group since 2010, although not eligible for loans. Some of the borrowed money, according to the ED, was used for the ABG group for “personal” purposes. He also alleged that the group used money borrowed from IFIN to prevent its accounts from turning into non-performing assets (NPA). The agency alleged that ABG Shipyard, the group’s flagship company, had been in financial difficulty since 2013-2014.

The ED separately filed a money laundering case against ABG Shipyard and its directors in relation to a loan default of over Rs 22,800 crore by the company.

The ED case is based on the FIR filed by the CBI on February 7 in which it alleged that the company misappropriated loans granted to it by a consortium of 28 banks and used its sister concerns to make go- return funds and repay other loans instead. to use them for the purposes for which they were taken. The CBI found that ABG allegedly used up to 98 related companies to channel the loan funds.

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