Ultratech Cement challenges Binani’s sale to Dalmia Bharat

MUMBAI: Ultratech Cement Ltd, the Aditya Birla group company that has lost a bid to acquire Binani Cement Ltd, has challenged the sale of the cement maker to rival Dalmia Bharat Ltd, alleging lack of transparency in the bidding process.

“The creditors of Binani Cement have overlooked important aspects of the resolution plan submitted by us and have hastily decided to approve the sale to Dalmia for reasons best known to them,” Atul Daga, chief financial officer at Ultratech Cement, said in an interview.

“We fail to understand the reasons behind approving the sale to Dalmia, although we had made the highest bid,” Daga said. “Isn’t the committee of creditors responsible for looking after the interests of all stakeholders?”

Ultratech has now challenged the sale to Dalmia Bharat at the National Company Law tribunal (NCLT), and the matter is scheduled to be heard on Monday at the Kolkata bench of the tribunal.

On March 16, a committee of Binani Cement creditors approved the resolution plan from a consortium led by Dalmia Bharat Ltd.

The Dalmia Bharat consortium had bid about ₹6,350 crore ($978 million) and had offered close to a 20% stake in Binani Cement to its lenders.

Dalmia Bharat proposed to make the Binani Cement investment through an equal joint venture with India Resurgence Fund, which is backed by Bain Capital Credit and Piramal Enterprises Ltd.

had reported on February 19 that both Ultratech and Dalmia had submitted bids of roughly around ₹6,000 crore each, with included upfront cash payments, as well as an offer of close to 20% stake in Binani to lenders.

Although Dalmia Bharat’s bid was marginally higher, Ultratech had raised the offer by ₹700 crore, taking its overall offer above ₹7,000 crore.

had reported on February 16 that Ultratech was specifically asked by the creditors 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 ₹1,175.49 crore on Ultratech.

This was part of an overall penalty of ₹6,700 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 (COMPAT) against the order, which stayed it.

“We were told that our bid was not being considered because of the contingent liability following the CCI order,” said Daga.

“Even before we revised the bid higher, the difference in score between us was marginal, but lost out as creditors unilaterally decided that we will not get the Competition Commission of India approval for the deal,” Daga added.

On February 23, Ultratech had approached the Competition Commission of India, seeking an approval in the event of it acquiring Binani Cement.

Dalmia Bharat, too, had made a similar request to CCI. Binani Cement is a unit of Binani Industries Ltd (BIL).