Gujarat NRE Coke (GNCL) is likely to face liquidation process as the creditors of the company have rejected the resolution plan, submitted by an Ahmedabad-based asset reconstruction company (ARC) — Rare Asset Reconstruction — under the corporate insolvency resolution process.
Following this to save the company from going in to liquidation, employees of the Kolkata-based firm on Saturday night submitted a resolution plan to the resolution professional (RP), Sumit Binani, Arun Kumar Jagatramka, chairman and managing director of GNCL, told FE. The company currently employs close to 2,000 workers. However, it seems unlikely that the plan, submitted by the workers, will be considered due to paucity of time. For Gujarat NRE group, the moratorium of nine months expires on Monday. Binani was unavailable for comments.
The case is listed for hearing on January 1 at the Kolkata bench of the National Company Law Tribunal (NCLT).
Gujarat NRE owes lenders around Rs 4,600 crore. In April, the Kolkata bench of the National Company Law Tribunal (NCLT) had admitted the application by the metallurgical coke producer for commencing the insolvency resolution process.
Talking to FE, Anil Kumar Bhandari, MD of Rare Asset Reconstruction, said his company had submitted over Rs 400 crore resolution plan, and this offer was more than the liquidation value of Gujarat NRE Coke. “I am not aware of the CoC voting results. But, our offer was more than the liquidation value of around Rs 359 crore. As per our proposal, our investment to debt and equity both would have been over `421 crore,” Bhandari said.
“Now, I believe that there could be some haircuts (for the banks), but then this was the best offer that we could work out given the circumstances. But, the final decision lies with the lenders,” he added. The last CoC meeting was held on December 28.
Although four companies had expressed interest in submitting resolution plans for the debt-stricken company, finally only the ARC submitted the resolution plan, said the sources cited above. “There was only one resolution plan on the table. But the CoC has voted against that resolution plan. Now, according to the IBC norms the company is to be liquidated,” the source added.
The company’s financial creditors are State Bank of India (SBI), Bank of Baroda, Axis Bank, Standard Chartered Bank, ICICI Bank, Tamilnad Mercantile Bank and DBS Bank, among others. SBI has the largest share among the creditors. An email sent to SBI did not elicit any response till the time of going to the press.
On December 20, during the hearing of the case, Binani submitted before a division bench of the tribunal, comprising justices Vijai Pratap Singh and Jinan KR, that he invited a fresh expression of interest (EoI) from the public as the resolution plan, which had been submitted by the promoters, could not be considered in view of the commencement of the Ordinance amending the Insolvency and Bankruptcy Code (IBC), notified on November 23.
As the company’s loans have remained non-performing for over a year, its promoters have become ineligible under the revised IBC guidelines.
Appearing before the bench, the promoter’s counsel MS Tiwari had urged the bench to direct the CoC to consider the resolution plan submitted by Jagatramka as the plan had been submitted before promulgation of the Ordinance. The bench rejected the plea of the promoter.
With the tribunal dismissing his application for directing the CoC to consider the resolution plan submitted by the defaulting promoter, Tiwari had said he wanted to recall the insolvency application, which the company had filed before the tribunal under Section 10 of the IBC. The bench dismissed this plea also, stating that the insolvency petition had already been admitted, and therefore it could not be withdrawn now.
The tribunal had also rejected an appeal of the RP for providing more time for the completion of the resolution process. The committee of creditors (CoC) of the firm had in principle agreed to a further extension of the moratorium period.
Gujarat NRE Coke reported a net loss of `676 crore on the back of `541 crore in revenues in FY17. The company has two metallurgical coke plants in Khambhalia and Bhachau in Gujarat and the third plant in Dharwad in Karnataka. It has wind mill and also a mini steel mill in Gujarat to recycle steel scraps using green wind energy to manufacture TMT Bars.