UltraTech takes fight for Binani Cement to NCLT after bid rejection

UltraTech takes fight for Binani Cement to NCLT after bid rejection

Mumbai, Mar 7: The Aditya Birla group’s UltraTech Cement moved the National Company Law Tribunal (NCLT) in Kolkata against the resolution professional for Binani Cement after its bid for the cement company undergoing insolvency proceedings was rejected.
The Kumar Mangalam Birla company had earlier served a notice to the resolution professional asking for details on the weight given to its bid as compared to the winning bid by a consortium consisting of Dalmia Bharat and Bain Capital’s India Resurgent Fund and Piramal Enterprises.
A source close to UltraTech said that barring a single-line email that its bid was rejected, UltraTech did not receive any communication from the resolution professional. “There was no transparency over how the bids were evaluated and why the UltraTech bid was rejected,” the source said.
Binani Cement’s insolvency resolution was conducted by Vijaykumar Iyer, partner, Deloitte, after Bank of Baroda moved the NCLT. This was after Binani Cement failed to repay its debt worth Rs 39.7 billion last July.
Binani Cement has a production capacity of 11 million tonnes per annum and had received bids from Dalmia-Bain, UltraTech, Ramco Cement, Heidelberg, stockbroker Rakesh Jhunjhunwala and JSW Cement.
JSW Cement was the winner in the first round, but the resolution professional had decided to call for rebids.
According to a source, UltraTech and other bidders had been informed of the weight that would be given to various parameters. These parameters included the company’s background, experience and upfront cash to be paid to the secured lenders.
While Dalmia offered Rs 63 billion, UltraTech’s offer was Rs 1 billion less. Dalmia’s offer was to settle with only one unsecured lender, IDBI Bank, UltraTech offered a 30 per cent haircut to all unsecured lenders.
Both bids offered zero haircut to secured lenders, making it one of the rare cases where banks are not taking losses on bad loans. “UltraTech’s offer was Rs 1 billion less, but that could have been matched with the Dalmia offer. Besides the Dalmia offer does not take care of over 3,000 unsecured creditors and small suppliers, while UltraTech offered to take care of all suppliers,” said the source. He added that the Insolvency and Bankruptcy Code was clear that the resolution plan should take care of all stakeholders, and not only key lenders.