UltraTech closer to acquiring Binani

Cement firm seeks CCI nod for takeover

UltraTech Cement is leading the race to take over Binani Cement by offering around ~62 billion and a 20 per cent stake in the company to unsecured financial creditors. Dalmia Bharat Cement had made a slightly better offer at ~63 billion, but is likely to lose as UltraTech has offered equity stake to creditors.

On Thursday, the Aditya Birla group company sought permission from the Competition Commission of India (CCI) for the takeover and said its merger proposal for Binani Cement was being submitted in relation to the resolution plan filed by UltraTech on February 12 under the Insolvency and Bankruptcy Code.

With its offer, UltraTech has pipped five others — Dalmia Bharat, JSW Cement, HeidelbergCement, stock broker Rakesh Jhunjhunwala, and Ramco Cements. However, the final decision on the winner will have to be ratified by the National Company Law Tribunal (NCLT).

According to CCI filings, UltraTech has proposed to acquire 100 per cent of the equity share capital of Binani Cement and 20 per cent of that will be allotted to unsecured financial creditors of the beleaguered firm. “In the event that the proposed allotment takes places, UltraTech will hold 80 per cent of the equity share capital of Binani Cement,” UltraTech said.

When contacted, an UltraTech spokesperson declined to comment on the issue.

Binani Cement was sent to the NCLT in July last year following a petition by the Bank of Baroda. The company had defaulted on its debt of ~39.76 billion as of March 2017 ( see chart).

The debt-laden company has a production capacity of around 11.25 million tonnes per annum (mtpa).

If the merger goes through, the total capacity of UtraTech will rise to around 100 mtpa, lower than the CCI’s threshold in the relevant markets — Gujarat, Haryana and Rajasthan.

India’s total cement production capacity is about 425 mtpa, but the industry is producing 280 mtpa due to low demand. The deal could still run into trouble, as a petition from Binani Industries — the promoter of Binani Cement that is interested in taking part in the insolvency process of its India plant alone and of the cement firm — is pending did not take its assets in with the Kolkata Bench of China and Dubai into the NCLT. Binani Industries account. Binani Industries has claimed that the deal was also claimed that despite being undervalued by the resolution owning entire stake in Binani professional. Cement it was not provided

According to Binani any information by the resolution Industries, the cement company's professional, crucial valuation is ~173 billion, documents were withheld, including mining rights and the directors of Binani of ~117 billion, much higher Industries were not invited to than that offered by any meeting of thecommittee UltraTech. Also, the company said of creditors. the valuation was that