The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal challenging Nuvoco Vistas Corporation 's acquisition of Vadraj Cement, marking a significant development in the cement industry's landscape. The tribunal's decision upholds the Mumbai National Company Law Tribunal's (NCLT) earlier approval of Nuvoco's resolution plan for the debt-ridden cement company.

Key Points of the Acquisition

• Acquisition Value: Nuvoco Vistas' resolution plan involves an upfront payment of Rs 1,800.00 crore.
• Asset Details: Vadraj Cement operates a 3.50 MTPA clinker unit in Kutch and a 6.00 MMTPA grinding unit in Surat.
• Previous Ownership: The company was formerly owned by ABG Shipyard.
• Total Debt: Vadraj Cement's total debt exceeded Rs 8,000.00 crore.

NCLAT's Observations

The appellate tribunal noted several factors that influenced its decision:

• The bid value from Nuvoco Vistas exceeded the fair value of Rs 1,668.00 crore and the average liquidation value of Rs 1,080.00 crore.
• The Committee of Creditors (CoC) approved the resolution plan with a 100% majority.
• Employee claims totaled Rs 10.51 crore, with Rs 6.30 crore provided and the remaining amount to be paid on a pro-rata basis.

Employee Concerns Addressed

The appeal against the acquisition was primarily filed by Vadraj Cement employees, who had challenged the bid over concerns regarding gratuity dues payout. The NCLAT's dismissal of the appeal suggests that the tribunal found the resolution plan adequately addressed these concerns within the framework of the insolvency proceedings.

Acquisition Process

Nuvoco Vistas acquired Vadraj Cement through its subsidiary, Vanya Corporation. The insolvency process for Vadraj Cement began following a plea by Punjab National Bank.

Industry Implications

This acquisition strengthens Nuvoco Vistas' position in the cement industry, particularly in the western region of India. The successful resolution of Vadraj Cement's insolvency case also demonstrates the effectiveness of the Insolvency and Bankruptcy Code in facilitating corporate restructuring and debt resolution.

The NCLAT's decision to uphold the acquisition underscores the importance of balancing creditor interests with employee concerns in insolvency proceedings, while also ensuring the revival of stressed assets in the industrial sector.

Nuvoco Vistas Corporation Limited, a prominent player in the Indian cement industry, has taken a significant step to bolster its financial position. The company's Board Committee has given the green light for the issuance of Non-Convertible Debentures (NCDs) worth up to Rs 600.00 crores on a private placement basis.

Key Details of the NCD Issuance

• Issue Size: Up to Rs 600.00 crores
• Issuance Method: Private placement
• Tranches: To be issued in one or more tranches
• Listing: Proposed to be listed on the Wholesale Debt Market Segment of National Stock Exchange of India Limited
• Nature of Debentures: Unsecured and/or Secured, Rated, Listed, Redeemable, Non-Convertible Debentures (NCDs)

Additional Information

The decision was made during a meeting of the Committee of the Board of Directors held on August 18. The meeting, which commenced at 5:30 p.m. and concluded at 6:00 p.m., saw the approval of this significant financial move.

Debenture Characteristics

While specific details such as tenure, coupon rates, and interest payment schedules will be incorporated in the Key Information Document, the company has disclosed some general characteristics of the NCDs:

• The debentures may be secured or unsecured
• They will be rated and listed
• The NCDs will be redeemable

If secured NCDs are issued, they will be in favor of the Debenture Trustee as per the terms and conditions of the Debenture Trust Deed/Security Creation Documents.

Regulatory Compliance

The company has assured that all details required under Para A of Part A of Schedule III, read with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI Master Circular no. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, have been provided.

This move by Nuvoco Vistas Corporation Limited indicates the company's strategic approach to raising capital, potentially for expansion, debt refinancing, or other corporate purposes. The successful issuance of these NCDs could provide the company with the financial flexibility needed to pursue its business objectives in the competitive cement industry.

Investors and market watchers will be keenly awaiting the release of the Key Information Document, which will provide crucial details about the NCDs, including their tenure, coupon rates, and credit ratings.