Bringing UltraTech back in the race for Binani Cement,the National Company Law Tribunal (NCLT) on Wednesday asked the resolution professional (RP) and the committee of creditors (CoC) to consider the revised offer from the country’s largest cement maker. The decision is important since the Supreme Court had on April 13 been unwilling to interfere in the Insolvency and Bankruptcy Code (IBC) proceedings, following which Binani Industries (BIL) withdrew its appeal for an out-of-court settlement for the sale of its subsidiary Binani Cement.
The judges were upset with BIL’s attempt to withdraw the sale of Binani Cement from the purview of the IBC. BIL’s appeal in the SC had been prompted by an offer it received from UltraTech Cement to buy a 98.43% stake in Binani Cement for Rs 7,266 crore provided the resolution process under the IBC was terminated. The direction by the NCLT is also significant because other benches might consider allowing bids that have been revised or submitted late. The final decision on Binani Cement, it would appear, now rests with the CoC.
The bench, however, offered Dalmia Bharat-controlled Rajputana Properties (RPPL) a chance to better its offer of Rs 6,930 crore. This bid, which includes infusion of working capital and capex, was declared the highest bid (H1) on February 27. UltraTech Cement had improved its offer to Rs 7,900 crore, after submitting an earlier revised bid of over Rs 7,200 crore to the RP, Vijaykumar V Iyer, on March 8. UltraTech had claimed that negative points had been wrongly assigned to its bid, making it the H2 and not H1 bidder.
Justices Jinan KR and Madan Balachandra Gosavi observed in their order on Wednesday: “It is made clear that if both resolution applicants are willing to participate in the bidding process, CoC is expected to allow both resolution applicants in the bidding process” and go with the bidder “best for revival of the corporate debtor as decided by the CoC”.
Binani Cement has a manufacturing capacity of 11.25 million tonnes of cement per year with integrated plants in India and China, and grinding units in Dubai. As per details on Binani Cement’s website, financial creditors of the company had claimed Rs 6,470.26 crore, while the NCLT had admitted claims worth Rs 6,469.36 crore.
Dues to operational creditors, they claim, amount to be about Rs 510 crore. The Kolkata bench of the NCLT had admitted the insolvency petition against Binani Cement on July 25, 2017, after Bank of Baroda referred the company to the bankruptcy court. In FY17, Binani Cement had posted a net loss of Rs 348 crore on revenues of Rs 1,527 crore, according to data from Capitaline.