As Dalmia Bharat and UltraTech Cement continue to battle for Binani Cement in the Kolkata Bench of the National Company Law Tribunal (NCLT), Dalmia Bharat group CEO Mahendra Singhi speaks to Avishek Rakshit about the importance of Binani Cement in his company’s scheme of things. Edited excerpts.
With 14 ligations in the Kolkata Bench of the NCLT, the Binani Cement takeover plan is turning out to be a long-drawn affair. Do you think the matter will reach the Supreme Court?
The next date of hearing in the NCLT is April 2 and it will take a week or more for the resolution plan to be approved. Then it is up to litigators to take the case further to higher courts or not. The position of law is pretty clear here – cases that have been referred under the Insolvency and Bankruptcy Code (IBC), cannot be taken out of purview of the NCLT and settled outside the scope of IBC. Even if the case is taken to the Supreme Court, I think it will be resolved soon. Our case rests on an extremely strong legal position.
Why is the Binani Cement takeover so important for you?
The acquisition of Binani Cement will give us an exposure to the entire north Indian market, including Gujarat, and will help Dalmia Bharat emerge as a pan-India cement manufacturer. Currently, our consolidated capacity stands at 27 million tonnes (mt). The acquisition of Murli Cement increased it by 3 mt and Kalyanpur Cement by another 1 mt. Now with the acquisition of Binani Cement, our total capacity will increase to 42 mt and will also give us exposure to markets in China and Dubai.
The Binani Cement acquisition will give you an international exposure and you have not been operating in the global space. What plans do you have for international operations?
At present, we do not have an international plan in place, but once we take possession of the company, we will take a call on how best to use these assets.
How do you plan to finance the takeover of Binani Cement?
We have formed a partnership with Piramal-Bain Capital, where both of us have an equal holding. For the takeover, both of us will take up equal equity and the rest of the finance will be arranged from banks. It will be an appropriate mix of debt and equity. This plan has been approved by the Committee of the Creditors.
By when do you think you can turnaround Binani Cement?
In a matter of one or two years to the most. Our performance parameters are one of the best in the industry. EBITDA per tonne is one of the highest among peers, and we have a good track record to turn around stressed assets.
Operational creditors have alleged that their interests have not been looked into in your resolution plan. What is your response?
Based on the information we got from the Committee of Creditors and the resolution professional, we have placed our bid. We were able to satisfy most of the operating creditors fully because of which our plan was approved. In any stressed asset sale, everyone cannot be fully satisfied. The revival of the stressed asset will create many opportunities for operating creditors to grow their business.
How do you think the Binani Cement saga is going to affect the role of the resolution professional in future?
Once the resolution professional takes over, suspended promoters and the board start feeling uncomfortable and they try to find loopholes. When an asset becomes a non-performing asset (NPA), isn’t it obvious that it became so on account of problems with the management that guided that company? Now when the resolution professional takes over and mismanagement issues come up that made it an NPA, and promoters start alleging something or the other to hide their fault. I think the resolution professional to an extent is made a scapegoat, on one hand they do a good job and on the other hand their reputation gets questioned in the tribunal. I feel the government and the tribunal has to come up with some right guidance for such things, there should be punitive punishment in place so that resolution professionals are not unnecessarily harassed.