GOL Offshore Ltd, the offshore oilfield services company that was at the centre of a takeover battle in 2009 between now bankrupt ABG Shipyard Ltd and Bharati Defence and Infrastructure Ltd, has shut down after lenders failed to find an investor for the debt-laden company.
The collapse of GOL Offshore has stripped the Indian shipping industry of a much-qualified company that would have given stiff competition to foreign fleet owners in supplying ships to the offshore oil and gas exploration and production firms.
“It was really sad to see the company go down,” said Atul Agarwal, a former managing director at shipping firm Mercator Ltd, who had offered to invest some ₹600 crore to take over GOL Offshore.
“That was one Indian company that had qualification for almost everything in the offshore segment and it is sad to see it die. Because, that was the only company that could compete with foreign companies,” he said.
Not many Indian companies are qualified to do offshore work. “My interest in taking over GOL Offshore was not because of the contracts it had. Bankers said you take the assets, but we will not give you the company. I said I’m interested only in the company and some 4-5 ships because this company has got qualifications which are very difficult to secure,” he said.
Pre-qualification credentials were not an issue with some of the other cargo shipping firms that went down recently. “Today, I can start a new cargo shipping company and get contracts, but in offshore, you need qualifications for ONGC etc. GOL had the qualifications to do everything in offshore work – be it construction work, pipe-laying work, drilling work, rigs, floaters, port operations etc. Now, no one will ever be able to get those qualifications at least for the next ten years,” Agarwal asserted.
“I even told the bankers you strip the company of all the assets and give me only the name. Qualification will still come,” he said.
But the bankers, including ICICI Bank, Axis Bank, PNB, IDBI, were in no mood to oblige.
Agarwal later withdrew his offer that was submitted through his Asmara Resources Pvt Ltd, after ONGC terminated the charter hire of a drilling rig named ‘Badrinath’ which was critical to his investment proposal.
GOL Offshore earned some 70 per cent of its revenue through charter hires from ONGC, its biggest client. GOL Offshore, previously known as Great Offshore Ltd, was a unit of The Great Eastern Shipping Co Ltd, India’s biggest private ship owner. In 2006, following a family split, Great Offshore was demerged from The Great Eastern Shipping into a separate company led by Vijay Sheth.
Many in the shipping industry believe that Bharati’s acquisition of Great Offshore proved costly for the shipbuilder. It drove Bharati deeper into debt. In May 2009, Vijay Sheth, the promoter of Great Offshore, lost control over his firm to Bharati because of the shares he had pledged for loans, making him the first promoter in India’s corporate history to face such a situation. Sheth had pledged his shares with Prakash Kapoor and Vijay Kumar, the promoters of Bharati Shipyard, for a ₹240 crore loan in January 2009.
When he failed to repay the loan, the promoters of Bharati invoked the pledge and acquired the 14.89 per cent stake Sheth had pledged with them.
Bharati then announced a public offer to the shareholders of Great Offshore, in line with India’s takeover law. Bharati’s bigger rival, ABG Shipyard, joined the takeover battle but withdrew a day before the open offer was launched, making the deal expensive for Bharati. Kapoor and Kumar had to pay ₹870 crore to take their stake in Great Offshore to 49.73 per cent.
As GOL’s debt soared, a consortium of 14 banks hit the panic button and the account was labelled a non-performing asset. It coincided with Bharati’s own financial troubles which eventually led lenders to palm off their loan to Edelweiss Asset Reconstruction Company and later haul the shipbuilder to the insolvency court under India’s new bankruptcy law.