The Chennai Bench of the National Company Law Tribunal (NCLT) will on Monday hear the pleas of three firms — Citax Energy, Halida Petro and Gulf Petro — to consider their respective bids to revive the Nagarjuna Oil Corporation Ltd. (NOCL).
NOCL was jointly promoted in 1998 by the Nagarjuna Fertiliser Group of Hyderabad and the Tamil Nadu Industrial Development Corporation (TIDCO). Tamil Nadu provided financial incentives to the project during the Global Investors’ Meet in 2015. After several delays, cost escalations, natural disasters and a cash crunch, NOCL was brought under the insolvency resolution process in July 2017 by a vendor whose dues the firm failed to pay.
Efforts to ensure the survival of the six-million-tonne petroleum refinery project in Cuddalore have seen many a twist during the insolvency process. The refinery was staring at liquidation after three rounds of bidding in March and April failed to come up with any revival bid that was acceptable to the lenders.
BPCL, Haldia Petrochem, Gulf Petro, Dubai and Citax Energy, Dubai were in the fray. A consortium of 14 PSU banks, led IDBI and SBI, had recommended the liquidation of NOCL to the NCLT’s Chennai Bench, after the 270-day timeframe for coming up with a revival plan ended on April 20.
However, providing a lifeline to the project, the NCLT will be hearing the pleas by Citax Energy, Haldia Petro and Gulf Petro to consider their rejected bids for the project.
According to sources, the liquidation value for the revival bids was fixed at ₹1,440 crore and all three bids were rejected on the grounds that the bid values were below the liquidation value.
Minutes of meetings
NCLT has, for the first time, directed the resolution professional overseeing the process to share the minutes of the meetings of the committee of creditors with each of these bidders.
Sources noted that NOCL was the only incomplete project among the over 400 firms currently going through the insolvency process. The other firms were running companies with a revenue flow.
According to an industry analyst, there are some differences between NOCL’s case when compared with that of Bhushan Steel, which was the first big case to have been resolved under the Insolvency and Bankruptcy Code.
Tata Steel took over Bhushan Steel, which had outstanding loans to the tune of ₹44,000 crore and an annual revenue of around ₹15,000 crore. It paid ₹32,000 crore and, in addition, the lenders got 12% equity in the firm.
The analyst pointed out that in comparison, NOCL had outstanding loans of ₹8,000 crore and needed fresh capital to complete its project and start generating revenue.
