Naveen Jindal group, two others submit final bids for Reliance Naval

CoC to take a call on Wednesday

The Naveen Jindal Group, APM Terminals of the Netherlands, and a consortium of GMS of Dubai and Besiktas Group of Turkey have submitted final bids for Reliance Naval and Engineering. The Committee of Creditors (CoC) will meet on Wednesday to evaluate the bids and select the highest bidder.
 
The former Anil Ambani group company was sent for debt resolution to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016, after it failed to repay Rs 12,400 crore of debts. The company owns and operates a shipyard off the southern coast of Gujarat near Pipavav and fell upon bad times after orders from the Indian defence establishment dried up.
 
While APM Terminals and GMS Dubai have potential synergy benefits from the acquisition, the Naveen Jindal group sees the shipyard as a potential customer for its steel products.
 
Earlier, 12 companies had expressed interest in acquiring Reliance Naval, but only three submitted final bids. The other companies backed out citing post-Covid economic downturn and lack of orders.

United Shipbuilding of Russia, one of the contenders till the EoI process, backed out of final bidding because its management believed the pipeline of new defence naval business was not clear and the government had also cancelled six contracts of the company.

IDBI Bank is the lead banker of the company with an exposure of Rs 1,300 crore and had filed for IBC proceedings against the company in January 2020. State Bank of India has an exposure of Rs 1,965 crore, while Union Bank of India had lent Rs 1,555 crore. The banks have jointly made claims worth Rs 12,429 crore (See chart).
 
All banks have already written off the entire amount and have transferred their debt to the newly-created National Asset Reconstruction Company for debt resolution.

The firm is also in the middle of an arbitration with ONGC over the cancellation of an order. ONGC had placed an order for 12 offshore vessels (OSVs) in financial year 2009-10 (FY10), but only seven OSVs were delivered till FY16 by the firm. Hence, ONGC cancelled the order and invoked the bank guarantees in FY19. An arbitration petition has been filed by the company against the cancellation of the order.