Dalmia Bharat’s Bid For Binani Cement Yet To Be Approved By Creditors, Says UltraTech

Creditors’ panel yet to take a call on Binani Cement’s resolution plan, says UltraTech Cement.

A worker levels a slab of cement at a construction site (Photographer: David Paul Morris/Bloomberg) 
A worker levels a slab of cement at a construction site (Photographer: David Paul Morris/Bloomberg) 

Kumar Mangalam Birla-led UltraTech Cement Ltd. has revised its bid for debt-ridden Binani Cement Ltd. higher after an investor group led by Dalmia Bharat Ltd. emerged as the highest bidder.

UltraTech decided to increase its offer to more than Rs 7,200 crore since the Dalmia-Piramal and Bain combine’s bid is yet to receive approval from the Committee of Creditors, Chief Financial Officer Atul Daga told Bloomberg Quint. Prior to this latest offer, the difference between the highest and second-highest bidder was nominal, Daga said.

The Birla group company and the Dalmia Bharat consortium emerged as the lead bidders for Binani Cement which is undergoing resolution under the Insolvency and Bankruptcy Code. The North-based cement firm was put on the block by the National Company Law Tribunal after lenders initiated insolvency proceedings against it. Its outstanding debt stood at Rs 3,608 crore as of March 2017.

The Dalmia consortium bid Rs 6,350 crore for Binani. Following this bid, UltraTech filed an application with the National Company Law Tribunal to review the process of shortlisting the H1 bidder, Daga said.

Dalmia Bharat has not yet responded to BloombergQuint’s request for a comment.

Some brokerages are apprehensive that this may lead to a bidding war. “NCLT now needs to take a final call and uncertainty prevails on whether UltraTech’s revised bid would be considered and if Dalmia too has an option to revise,” CLSA said in a March 9 report.

Others said the bid is around the replacement costs, which should allay shareholders’ fears of an aggressive bid. “The replacement cost to acquire Binani Cement’s plants of 6.25 million tonnes per annum at $150 per tonne for domestic capacity seems to be on the higher side as compared to UltraTech’s recent cost of $117 per tonne for acquiring 21.2 MTPA of Jaypee’s assets,” Hemant Nahata, AVP -research at IIFL Wealth told BloombergQuint. But if adjusted for limestone reserves, this seems to be a pretty fair deal, he said.

The company’s limestone reserves can feed into the brownfield expansion of the Binani plant in the next phase, Nahata explained.

Binani Cement also received interest from players like JSW, Heidelberg, JSW Group, Dalmia Bharat Ltd. and Ramco Cements and marquee investors like Rakesh Jhunjhunwala and Damani.