INVESTORS EYE NAGARJUNA OIL FOR RESOLUTION BID

N ag arjuna Oil Corporation Ltd( NO CL) has from three-four strong investors out of around the 20 investors to bid for a resolution plan, according to the expression of interest (EoI) floated by the resolution professional (RP).

According to sources, the resolution process might have to go for an extension of 90 days from the 180-day deadline, which ends on January 20, as the process is yet to be completed. The bidders’ list includes public sector undertakings (PSUs), foreign and Indian investors, said a source, on condition of anonymity.

In August 2016, the Hyderabadbased Nagarjuna Oil Refinery Ltd, the promoter of NOCL, had said that various prospective investors, including PSUs such as Indian Oil Corporation, sought information on the NOCL’s six million tonnes per annum petroleum oil refinery project in Cuddalore, around 200km south of Chennai.

PSUs such as HPCL, ONGC and foreign investors like Shell have made moves to acquire NOCL but none fructified. “A couple of strong bidders are still in the fray and they have asked for additional time to submit their bids to the RP, which will be evaluated by the committee of creditors (COC). And if a bid is found suitable, the COC will send it to the National Company Law Tribunal (NCLT) for approval,” a source said. The RP, however, was not available for comments.

KS Raju, chairman, N ag arjuna Group, in response to an email seeking comment, said, “It is a fact that there are several parties seriously interested in NOCL. Being a large and complex project, it does take time for the parties to conduct due-diligence and, hence, the need for additional time. The fact that they are interested proves that there is a high prospect for a successful resolution within the available time frame and the NOCL refinery project, which is a national asset, will be built and will have a bright future. The RP, the bankers, and all stakeholders are working diligently toward this.”

With the 180-day deadline set by the NCLT for the resolution process ending on January 20, the COC can seek a single extension of 90 days, which would end on April 20. The COC has to select resolution plan and submit it to the NCLT a month before the last date of the resolution period. If there are no successful bidders, the firm would be liquidated, which might have an impact on the promoters’ guarantee to an extent of ~50 billion, said sources.

Raju said, “It is common knowledge that if a resolution does not take place any company would go into liquidation. We do not believe that there is a cause of concern in our case. In any case, our fertiliser business is not directly connected with NOCL.” The company has around ~90 billion of debt, of which around ~80 billion is loans, from around 15 banks. Salaries of ~500-600 million are also pending, which might be cleared as part of the resolution plan. Once the recovery is done and the vendors, employees, and others are repaid, the shareholders would be paid based on the COC’s approval. The project, for which construction works started in 2009, had been partially completed in December 2011 after a cyclone and shortage of funds stopped work. The plant can meet Euro-VI requirements with some additions. Most of the statutory clearances are also in place, with a few requiring renewal. Land is available for expansion up to 30 million tonnes per annum. VAT benefit in the form of structural financial assistance is also available. VAT refund of up to~180 billion is available according to a government order issued after Tamil Na du government’ s Global Investors Meet 2015.

PSUs like HPCL, ONGC and foreign investors like Shell have made moves to acquire NOCL