UltraTech Cement on Tuesday cleared the entire dues of the creditors of Binani Cement to take possession of the latter’s plants in India, UAE and China. The board of Binani Cement has been reconstituted and the company has been turned into a wholly owned subsidiary of UltraTech.
In a regulatory filing with the BSE, UltraTech said, “In terms of the company's resolution plan approved by the National Company Law Appellate Tribunal (NCLAT), the board of Binani Cement has been re-constituted and BCL has become a wholly-owned subsidiary of the company with effect from 20th November, 2018”.
It follows the Supreme Court’s ruling on Monday which approved UltraTech’s plan and dismissed the contention from Rajputana Properties – the Dalmia Bharat led consortium - which had challenged the selection of UltraTech’s revised resolution plan by the NCLAT before the apex court.
“We have received the full payment from UltraTech and no amount is due from Binani Cement now”, a lead lender to Binani Cement said.
The maximum amount of payment made by UltraTech was to Edelweiss Asset Reconstruction Company amounting to Rs. 29.93 billion followed by IDBI Bank which, alongwith its Dubai branch, received over Rs. 23 billion.
EXIM Bank, which had earlier moved to National Company Law Tribunal (NCLT) against the offer from the Dalmia Bharat led consortium, received Rs. 6.69 billion. Had Dalmia Bharat’s plan been approved, this bank would have received Rs. 4.5 billion against a claim of Rs. 6.2 billion.
“UltraTech’s plan is paying the financial lenders more than the verified amount which was admitted by the resolution professional (RP) when Binani Cement was admitted in NCLT”, Sameer Kaji, senior advisor of corporate strategy at Binani Cement said.
The total claims which was verified and admitted by the RP was Rs. 64.69 billion in the financial creditors category while the total payout to the financial creditors has exceeded Rs. 68.50 billion.
“Not only did any of the lenders take any haircut under this plan but interest as on April 30, 2018 was also been paid”, the lender, quoted above said.
Binani Cement’s India unit in Rajasthan has a consolidated capacity of 6.25 million tonne per annum (mtpa) comprising of a 4.85 mtpa integrated cement unit and a 1.4 mtpa capacity split grinding unit.
This plant, in Sirohi in Rajasthan was initially set up with a capacity of 1.65 mtpa along with a 25 megawatt captive power plant with technological support from FL Smidth, Denmark, and Larsen & Toubro. Subsequently, the capacity was raised to 2.25 mtpa in 2005 and was doubled to 5.50 mtpa in 2007. In 2008, the split grinding unit was commissioned at Neem-Ka-Thana in the same state which upped the total capacity to the current level of 6.25 mtpa.
According to a report from Centrum Broking, Binani Cement has large amount of good quality limestone reserves at the current locations, as well as space for brownfield expansions.
“In case UltraTech plans to dispose-off international assets, these assets can be monetised for Rs. 15 billion. Thus, the implied value for the Indian assets would work at Rs. 10 billion per mt of installed capacity in India”, the report said.
Its plants in China and UAE each have an installed capacity of 2 mtpa respectively.
After resolution plans were invited for the sick Binani Cement, UltraTech had initially quoted an offer of Rs. 65 billion - inferior to Dalmia Bharat - but revised the same to outbid Dalmia Bharat just after the deadline. The Committee of Creditors, in turn, rejected the revised bid and the Dalmia Bharat consortium was selected as the H1 bidder. Its plan was submitted to the NCLT for approval in March 2018.
UltraTech, Binani Cement, SBI Hong Kong, EXIM Bank, operational creditors and other stakeholders, however, mounted opposition to the plan and on May 2, 2018, after a prolonged hearing, the NCLT ordered the CoC to approve UltraTech’s plan and asked to consider the one from Dalmia Bharat only if it matched (in effect outbid) the offer from UltraTech.
Thereafter Dalmia Bharat moved the NCLAT which, in its recently passed order, reasoned that the objective of the IBC was to provide a resolution process rather than prefer liquidation, in a time bound manner for maximisation of value of assets of such persons to promote entrepreneurship, credit availability and balance the interest of various stakeholders. It, therefore, passed UltraTech’s offer of Rs. 79.50 billion while dismissing Rajputana Properties’ Rs. 69.32 billion offer. After a challenge, the Supreme Court approved the plan from UltraTech.