Vadraj Cement up for sale under insolvency process; Adani, JSW, and ArcelorMittal in race

The ABG Shipyard group company Vadraj Cement will be sold under the Insolvency and Bankruptcy Code process, and potential buyers include an Adani group entity, Sajjan Jindal-owned JSW Cement, and ArcelorMittal Group, people with knowledge of the development told Economic Times (ET).

After Vadraj Cement was sued by trade creditor Beumer Technology India in August 2018 to recover unpaid debts, the Bombay High Court ordered the company to be wound up.

"But frustrated with the slow progress in selling the assets, the court agreed to transfer the debt resolution process of the cement company to IBC," one of the persons cited above said, mentioned ET in its news report.

Based on a bank's petition, the high court approved the transfer of the winding up proceedings to the National Company Law Tribunal (NCLT) in an order dated September 4, said ET in its news report.

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For Vadraj's bankruptcy process, lenders have recommended Pulkit Gupta, backed by EY, as an interim resolution expert.

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"JSW Cement and ArcelorMittal declined to comment. The Adani Group did not respond to ET's mailed query seeking its comment on the matter," said ET in its report.

ET in its news report said that the lenders anticipate that prospective buyers will make an offer of between ₹2,000 crore and ₹2,500 crore. The company's debt stands at ₹7,000-crore. The lenders that granted loans to the company are Punjab National Bank, Union Bank of India, Central Bank of India, Indian Overseas Bank, Bank of India, Bank of Baroda, UCO Bank, and Yes Bank, according to the news report.

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The company owns an integrated cement manufacturing facility in Kutch, Gujarat, which consists of a 10,000 TPD (tonnes per day) clinker unit and a 6-million-tonne (mt) cement grinding unit. Along with a captive jetty in Kutch, it also has mining rights for limestone. Due to the sale of the captive power plants that provided the cement plants with fuel following a loan default, both of the cement units are not in operation. In October 2021, Alpha Alternatives Holding and Algebra Endeavour acquired Vadraj Energy (Gujarat) through the IBC route, as per a tribunal order that authorised the plan, said ET in its report. 

In its report, ET noted that ArcelorMittal would be entering the cement industry if it were to win the bid. However, the company had previously declared intentions to establish an 18.75 million-ton cement plant in Odisha in December 2021. Near the steel plant Arcelor purchased from Essar Steel is the Gujarati Vadraj Cement unit. Since steel slag can be used to make cement and is blended with clinker to reduce clinker factor and costs, the cement plant will enhance its steel business.

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