Binani Cement, which was admitted by NCLT in July 2017 for resolution under the insolvency and bankruptcy code, owes around Rs6,500 crore to banks. Photo: Bloomberg
Mumbai: Dalmia Bharat Cement Ltd on Tuesday emerged the winner for troubled Binani Cement Ltd, beating India’s largest cement maker UltraTech Cement Ltd which had put in a nearly identical bid.
The creditors’ panel supervising the insolvency proceedings of Binani Cement on Tuesday approved the resolution plan submitted by Dalmia, backed by Bain Piramal Resurgence Fund. Mint had reported on 19 February that Dalmia Bharat and UltraTech had submitted nearly identical bids.
The Dalmia consortium has agreed to invest around Rs6,700 crore in the stressed cement firm over a period of time, two people aware of the development said. Binani Cement, which was admitted by the National Company Law Tribunal (NCLT) in July 2017 for resolution under the insolvency and bankruptcy code, owes around Rs6,500 crore to its lenders.
According to the two people cited earlier, UltraTech’s bid was edged out because of some concerns around Competition Commission of India related penalties.
An UltraTech Cement spokesperson said she is not aware of the development pertaining to CCI and declined to comment on the matter.
In 2016, CCI had imposed a penalty of Rs1,175.49 crore on UltraTech. This was part of an overall penalty of Rs6,700 crore imposed on 11 cement companies, including UltraTech, ACC, Ambuja Cements Ltd, Ramco Cements Ltd and JK Cement Ltd, as well as industry body Cement Manufacturers Association for indulging in cartelisation. UltraTech approached the Competition Appellate Tribunal against the order, which stayed it.
The second person said the committee of creditors will meet representatives of the consortium over the next two days to crystallize the plan further. “The lenders will be able to recover almost all the money. The committee of creditors will be holding meetings over the next couple of days to negotiate with the consortium on any further tweaks that may be needed to the resolution plan,” he said.
According to the resolution plan, Binani Cement will be kept as a separate entity until the restructuring is completed. Once the resolution takes place, the entity will be merged with Dalmia Bharat. “The consortium has offered around 20% stake to the lender in Binani Cement. The lenders are, however, more keen on a cash deal,” the first person said.
The Dalmia consortium has offered Rs 4000 crore as upfront payment to secured lenders.
Binani Cement is a subsidiary of Binani Industries Ltd (BIL), a part of the Braj Binani Group. BIL is the holding company of the group, and has presence in five key businesses areas, including cement, fibreglass, infrastructure and energy. Binani Cement has an integrated plant in Sirohi Rajasthan which will help Dalmia Bharat Cement to strengthen its foothold in western India. Dalmia Cement, on the other hand, has a stronghold in south India. The firm has cement manufacturing plants in Dalmiapuram and Ariyalur Tamil Nadu and Kadapa in Andhra Pradesh, with a total capacity of 9 million tonnes per annum.
