Mumbai: Dalmia Bharat Cement Ltd, which was engaged in a bitter bidding war with UltraTech Cement Ltd, has ruled out any impact of an alleged fraud on the resolution process of Binani Cement Ltd, in which it has emerged the winner.
On Wednesday, various news reports said the resolution professional of Binani Cement has moved the Kolkata bench of National Company Law Tribunal (NCLT) alleging fraudulent transactions made by Binani promoters.
“The resolution plan has been approved by the creditors and we have already furnished performance guarantee and are on track to acquire Binani,” Mahendra Singhi, group chief executive, Dalmia Bharat Cement, said in an interview on Wednesday.
On the reports that cited a forensic audit conducted by an external auditor, Singhi claimed it was already aware of instances of alleged fraudulent transactions between Binani Cement and some group companies.
“We are not shocked by the revelations at all; rather, we are relieved because we were able to spot these anomalies at the due diligence stage and were able to take an informed decision while bidding,” Singhi said.
Resolution professional Vijayakumar Iyer made the allegations based on a report by external forensic consultant Haribhakti and Co., which was appointed in November for reviewing some transactions by Binani Cement.
Iyer has alleged that the promoters of Binani Cement diverted funds to the tune of Rs2,500 crore through capital advances, inter-corporate deposits, loans and other means to related parties at preferential prices, which, in turn, affected the company’s working capital position.
Reacting to UltraTech Cement’s accusation that the bidding process was non-transparent, Singhi maintained that the data room of Binani Cement was made available to all bidders, and there was no reason to feel that information was concealed by the resolution professional or the creditors at any stage.
“I cannot comment on the quality of UltraTech Cement’s due diligence; but as far as we are concerned, we had all the necessary information available to us,” Singhi said.
The battle for Binani Cement had acquired a new dimension when earlier this week, Binani Industries Ltd, the parent company of Binani Cement, moved NCLT to bring the company out of the insolvency proceedings after signing a bilateral agreement with UltraTech Cement to sell a controlling stake for more than Rs7,000 crore.
Announcing the bilateral deal, UltraTech Cement had said it expected the creditors of Binani Cement to recover their entire outstanding loans, along with some return on equity for the company’s shareholders.
The matter is scheduled for hearing on Thursday.
“The insolvency resolution process is irreversible and we believe Binani Industries has no locus standi anymore in this issue,” Singhi said, adding “It is possible that they (Binani Industries) are aware that the fraud was reported to NCLT and they are trying to get out of this situation by doing a bilateral deal with UltraTech Cement.”
On whether Dalmia Bharat Cement will pursue recovery of the funds allegedly misappropriated through fraudulent transactions once it takes control of Binani Cement, Singhi said, “We need to get into greater details of the alleged fraud and only then we will be able to take final decision in this matter.”