ABG Shipyard suspends operation at Dahej yard after contractors’ agitation over due payment

The company had faced a similar problem in March-April after production contractors pressed for the payment of their outstanding dues.

Written by Kumar Anand | Vadodara | Updated: May 27, 2015 6:39:05 pm

ABG Shipyard Limited, the country’s largest private shipbuilder, has been forced to temporarily suspend its operation at its Dahej yard near Bharuch after civil contractors intensified their agitation demanding the release of their long-due payment. The company, which is already passing through rough phase as it opted for corporate debt restructuring in September 2014 for repayment of Rs 11,000-crore loan, declared a two-day paid holiday on Wednesday to ensure safety of its employees and properties in the face of intensified agitation.

The company had faced a similar problem in March-April after production contractors pressed for the payment of their outstanding dues. The company managed to strike a deal with them as the banks which are managing the company’s finances started releasing their due salary on terms set by them and agreed by the contractors.

In the current case, however, the company has not been able to pacify the agitating contractors, who have demanded the release of 25% payment as against the company’s stand to release 10%. The agitation may force the company to miss the December delivery target of cadet training ship to the Indian Navy, officials said. The company recently rolled out a Battle Practice Target vessel for the Indian Navy. Company officials said that the government has delayed payment of instalments for Rs 1,300-crore Indian Navy ships that it is contracted to build.

Officials said that a group of around two dozen agitating contractors who were engaged in construction work since 2009-10 began protesting, demanding payment of their due salary on Tuesday. Their protest turned violent as protesters forced other employees from entering office premises. Police were called in to provide security.

“The ABG management has decided to suspend work till Thursday until the safety of the employees is assured. The company has tried to convey agitating contractors that all financial control and payment is being managed by the banks after it opted for CDR, so it has no authority or power to release outstanding dues,” said Sunil Jain, manager (liaison).

“The ABG management was forced to declare a two-day paid holiday in the yard to safeguard company property and manpower security. This has resulted in heavy production loss and financial burden on the company. It has also affected the company’s image and credibility,” the company said in a statement. A memorandum was also submitted to the Bharuch collector detailing about the incident. The company reported a standalone net loss of Rs 897.70 crore for the financial year 2014-15, as against Rs 199.30 crore a year ago.

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