Piramal-Birla friction surfaces over Binani cement acquisition at PM meet

Aditya Birla Group Chairman Kumar Mangalam Birla and Piramal Group Chairman Ajay Piramal voiced their differences on bankruptcy proceedings in a meeting with Prime Minister (PM) Narendra Modi, along with other business leaders, in Mumbai on Tuesday. 

Piramal and Birla are pitted against each other in the National Company Law Tribunal (NCLT) process for the acquisition of Binani Cement.

According to a source who attended the meeting, Piramal informed the PM that the NCLT process was being vitiated by some players who had lost the race at the bidding stage but were trying to get back into the process through other means. 

Reacting to this, Birla said the NCLT process was clear that the company would be awarded to the highest bidder and not arbitrarily. Birla also said the NCLT process should be such that it would demand the least sacrifice from all stakeholders. 

Neither business leader mentioned at the meeting that they were in the race to buy Binani Cement. 

When contacted, a Birla spokesperson said the group’s stand was clear that the highest bidder should bag a company in the NCLT process.

Piramal’s comments came after the PM sought suggestions from India Inc leaders on how to increase growth rates. The meeting was held in Raj Bhavan.

“There was tension in the room as it was a corporate battle played out in front of the PM. Some of us were quite uncomfortable with the war of words,” said a chief executive officer who attended the meeting. The PM did not make any comment on the suggestions made by both the business leaders and just listened to the divergent views, the source added. 

Both Birla-owned UltraTech and the Piramal Group-Dalmia Bharat consortium are fighting a legal battle to take over Binani Cement in the NCLT, Kolkata, after Binani Cement defaulted on its loans. Birla officials have said in the past that even though it was the highest bidder for Binani Cement, it was given lower marks by the resolution applicant at the bidding stage. The Piramal-Dalmia combine was declared the highest bidder for Binani Cement by the resolution professional.

Later, UltraTech joined hands with the promoters of Binani Cement to offer the lenders ~79.6 billion, including the interest component lost by the banks. The matter is currently pending with the NCLT. Both parties have warned of taking the matter to the Supreme Court if they do not get a favourable verdict.

The PM had called a meeting of 41 business leaders to get feedback on the current business environment. Apart from the PM, Maharashtra Chief Minister Devendra Fadnavis and Minister of Railways and Coal Piyush Goyal, who is also handling the finance ministry till Arun Jaitley’s return, also attended the meeting. 

The Binani acquisition is important for both Birla and the Piramal-Dalmia consortium. The acquisition will make UltraTech Cement the leader in the north Indian market, overtaking the current market leader Shree Cement, which has a market share of 22 per cent. In case of a successful takeover, UltraTech’s market share will climb from 19 per cent to 26 per cent in North India. 

Similarly, Piramal-Dalmia consortium would gain significant presence in the important markets of Haryana, Rajasthan, and Gujarat.

Besides, Binani also has considerable limestone reserves, which can help either of the acquirer scale up operations considerably. Binani has total capacity of 11.25 million tonnes per annum across India, China, and the United Arab Emirates.