Vedanta Group questioned the evaluation metrics adopted by lenders of Jaiprakash Associates Ltd (JAL), which had selected the lower bid of Rs 3,400 crore from Adani Enterprises for the debt-ridden company.
During proceedings before the National Company Law Appellate Tribunal (NCLAT), the counsel representing Vedanta Ltd said the “valuation in the process has been used to wipe out commercial wisdom” by the committee of creditors (CoC).
NCLAT was hearing petitions filed by Vedanta Ltd, which has challenged the selection of Adani Enterprises as the successful resolution applicant for JAL.
Vedanta questions evaluation metrix
Pointing towards the evaluation matrix used by the CoC, senior advocate Abhijeet Sinha asked whether it was used “to achieve value maximisation or is it being used for some other purpose”.
He submitted that the evaluation matrix, RFRP (request for resolution plan), and process note relied upon by the CoC are merely guiding tools and cannot override the core objective of the insolvency framework, which is maximization of value.
Contending that Vedanta’s bid was Rs 3,400 crore higher in gross value and Rs 500 crore higher in net present value (NPV) than the resolution plan submitted by the Adani Group, Sinha alleged that there was no discussion at the CoC meeting about going with a lower bid.
The CoC has appointed BTO India LLC to carry out feasibility and viability analysis of resolution plans received, which provided scoring to each of the five resolution plans as per the evaluation metrics, which does not reflect “sound exercise of commercial wisdom”.
“In this, the max score is 35… out of 35, Adani gets 29.30, we get 18.51,” Sinha said, adding, “Now, this is actually, we are told, the only factor which has made (the basis of the decision)… but that is also a scoring factor, which the CoC itself has also not done.” For NPV, Vedanta has 35 out of 35. “The other factor where we are lower is equity, quasi-equity infusion for improving business operations within 180 days. We are 2.56 and 5,” he said.
Vedanta alleges lack of transparency
Vedanta’s counsel argued that the CoC, after introducing a challenge process due to sub-optimal bids, approved the very plan it initially found inadequate, undermining the integrity of the process.
He alleged material irregularities and a lack of transparency in the conduct of the entire process, and argued that the design of the challenge mechanism itself was inherently unfair, as bidders were required to submit both upfront and deferred payment components but were only shown the highest NPV after each round.
Earlier on March 24, NCLAT declined any interim stay over the Vedanta Group’s plea against the order passed by the NCLT approving Rs 14,535-crore bid by the Adani Group’s bid for acquiring JAL.
However, it had also said the plan would be subject to the outcome of the appeals filed by the Anil Agarwal-led Vedanta Group.
This interim order by NCLAT was challenged before the Supreme Court, which also declined to grant a stay. However, the apex court had directed that if the monitoring committee planned to take any major policy decision, it should first obtain the Tribunal’s sanction.