Dalmia Bharat to acquire bankrupt Murli Industries

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Dalmia Bharat is set to acquire Murli Industries, a Nagpur-based cement manufacturer referred to the bankruptcy court, in a deal that will involve huge write down of equity and Dalmia infusing close to Rs 400 crore to revive the company.

The committee of creditors to Murli Industries on Wednesday voted in favour of Dalmia Bharat’s bid despite Nagpur-based Gajanan Oil making a higher cash offer, said two senior bank officials requesting anonymity.

“Even as the bid from Gajanan Oil was far more attractive than Dalmia Cement, lenders decided in favour of Dalmia…because Jadhav (Gajanan Oil’s owner Nitin Jadhav) was not able to furnish bank guarantee of Rs 50 crore or convince lenders about source of funds,” said one of the bank officials.

As per the resolution plan, Dalmia Bharat will cancel almost the entire equity of Murli Industries and pay its lenders Rs 350 crore in cash, which means a haircut of 80 per cent for the banks. Murli Industries had availed loan of Rs 900 crore. With interest and penalty, its total outstanding has increased to Rs 1,700 crore.

As per the plan, Dalmia Bharat will infuse capital of Rs 69 crore in Murli Industries to hold more than 90 per cent stake in the company. Dalmia will also repay other statutory dues such as taxes and salaries of workman and employees. Lenders said the huge haircut would not hurt them since most of them have either written off the loan or have sold it to asset reconstruction companies and are holding security receipt. EdelweissBSE -0.15 % Asset Reconstruction owns 60 per cent of Murli Industries’ debt, followed by Bank of Baroda with 25 per cent. The remaining debt is with other asset reconstruction companies including ARCIL.

It was referred to National Company Law Tribunal in April by Edelweiss ARC.

Murli Industries, promoted by Nagpur-based Maloo family, has interest in paper and paperboards, edible oil, pulps, solvent and power, besides cement. It has an integrated cement manufacturing plant of 3 million tonnes. Dalmia Bharat has cement plants in Tamil Nadu and Andhra Pradesh with total capacity of 9 million tonnes per annum.

Source: THE ECONOMIC TIMES