Vendors unpaid at Reliance Shipyard

Three years of non-payment of dues to vendors slows work at Reliance shipyard

17 November 2018
After Anil Ambani’s Reliance Group acquired the Pipavav shipyard in Rajula, in Gujarat, payments to vendors either reduced significantly or stopped completely.

Almost two hundred vendors working with a Reliance shipyard in the city of Rajula in Gujarat’s Amreli district have remained unpaid since 2015. That year, Reliance Group, headed by the industrialist Anil Ambani, acquired the shipyard from the country’s largest ship building company—Pipavav Defence and Offshore Engineering Company Limited. At the time, Pipavav was on the verge of bankruptcy, with debts exceeding Rs 6,000 crore—all of which Reliance assumed with the takeover. According to a list of unpaid vendors compiled by Ambrish Der, Congress’s member of legislative assembly from Rajula, as of September 2018, Reliance owed 191 vendors a total of Rs 71.76 crore.

Several vendors told me they were initially optimistic that Reliance would repay their dues. They said that payments had started reducing in 2012, but till 2015, the founder-promoters of Pipavav, Nikhil Gandhi and Bhavesh Gandhi, had continued to pay them a percentage of their dues. After the Reliance takeover, payments to vendors either reduced significantly or stopped completely. Three years later, multiple banks have initiated loan recovery proceedings against Reliance Naval and Engineering Limited, or RNaval, which owns the shipyard, while vendors claim that Reliance owes each of them significant sums of money.

The vendors comprise merchants and contractors—the former supply various materials, such as cable wire and electrical panels, and the latter employ labourers for fabrication work on the shipyard. Shiva Bhai Vagh, who owns the firm Bajrang Construction, said he had been taking on contracts for fabrication work since 2008. Vagh told me that the payments had reduced since 2012, before adding, “Jabse Reliance aaya na, Anil Ambani, tab se toh waat hi lag gaya.” (Since Reliance and Anil Ambani came, we’ve been screwed since then.) According to Der’s list, RNaval owed Vagh’s firm Rs 72 lakh.

Since 2015, the Reliance Group has undertaken a rapid exploration of business opportunities in the defence sector. In March that year, Reliance Group announced that it would gain management control of Pipavav Shipyards over the next six months—by early January 2016, the takeover was complete. However, the case of the Reliance shipyard at Rajula does not present a promising picture of Ambani’s defence ventures. Despite public and personal assurances that he would repay the dues, Ambani has not only failed to pay the crores of rupees that it owes to local contractors, his conglomerate is struggling to ensure that the shipyard remains operational.

Sagar is a staff writer at The Caravan.

Keywords: Reliance Naval RNaval Anil Ambani Reliance Group Pipavav shipyard Rajula merchants contractors