Race for Binani Cement: Dalmia Bharat, UltraTech make similar bids
Dalmia Bharat and UltraTech have submitted bids of roughly around Rs6,000 crore each, which includes upfront cash payments, as well as an offer of close to 20% stake in Binani Cement to lenders.business Updated: Feb 19, 2018 12:19 IST
The race for Binani Cement Ltd is headed for a photo finish with top two contenders—Dalmia Bharat Cement Ltd and UltraTech Cement Ltd—submitting nearly identical bids.
The two finalists have submitted bids of roughly around Rs 6,000 crore each, two people close to the bidding process said, adding that the amount includes upfront cash payments, as well as an offer of close to 20% stake in Binani to lenders.
According to the people cited above, who spoke on condition of anonymity, lenders will decide on the winning bid in the coming week. Bloomberg was the first to report on 17 February that the race for Binani has narrowed down to Dalmia Bharat Cement, backed by Bain Piramal Resurgence Fund, and Aditya Birla Group company UltraTech.
“Both bidders have been asked to furnish additional details pertaining to their bids, following which the creditors will take a final decision,” said the first of the two people cited above. According to this person, UltraTech has been specifically asked to provide information on a Competition Commission of India (CCI) penalty, which is a contingent liability on the company.
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 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.
Binani Cement is part of the Braj Binani Group and is a subsidiary of Binani Industries Ltd (BIL). BIL is the holding company of the group, and has presence in five key businesses areas including cement, fibreglass, infrastructure and energy. Mint had reported in January that at least two lenders of Binani Cement, currently undergoing insolvency proceedings, have moved the appellate bankruptcy tribunal after the insolvency resolution professional (IRP) rejected their claims on corporate guarantees worth Rs2,000 crore issued by the company to some subsidiaries in the Binani group. Accordingly, resolution professional from Deloitte Touche Tohmatsu India Llp partner Vijay Kumar Iyer set a new deadline of 12 February, factoring in the additional liability of around Rs1,600 crore.
Emails sent to UltraTech Cement, Dalmia Bharat Cement and Deloitte remained unanswered till press time.
The cement sector in India has witnessed several large deals in the past two years, signalling consolidation in the space. In July 2016, Gujarat-based soap and detergent maker Nirma Ltd announced the acquisition of Lafarge India’s cement assets for $1.4 billion. In August 2016, Anil Ambani-led Reliance Infrastructure Ltd sold its cement business to Kolkata-based Birla Corp. Ltd, the flagship company of the MP Birla Group for Rs4,800 crore. Last year, Aditya Birla group company UltraTech Cement paid Rs16,189 crore to acquire the cement business of Jaiprakash Associates. The transaction increased UltraTech’s cement capacity by almost a third to 90.7 million tonnes per annum and gave the company access to the markets of Madhya Pradesh, Uttar Pradesh East, Himachal Pradesh and coastal Andhra Pradesh, where it did not have a presence.
Mint reported in November that Puneet Dalmia-controlled Dalmia Bharat group had submitted a binding offer to acquire Nagpur-based Murli Industries Ltd, which is currently facing bankruptcy proceedings in the National Company Law Tribunal (NCLT). The total haircut sought by Dalmia was close to 80% of the outstanding loans of Murli Industries, which has presence in cement, paper industries and solvent extraction.