Appellate tribunal NCLAT has dismissed the plea against the acquisition of Vadraj Cement by Nirma group cement business Nuvoco Vistas Corporation during an insolvency resolution process.
The Delhi-based principal bench of NCLAT has upheld the previous order passed by the Mumbai bench of the National Company Law Tribunal (NCLT), which on April 1, 2025, approved Nuvoco Vistas's plan for Vadraj Cement that includes an upfront payment of Rs 1,800 crore.
A two-member NCLAT bench comprising Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra rejected an appeal filed by an employee and authorised representative of employees of Vadraj Cement against the approval of Nuvoco Vistas's bid over their payout regarding their gratuity dues.
Gujarat-based Vadraj Cement, formerly owned by ABG Shipyard, which has a 3.5 MTPA (million tonnes per annum) clinker unit in Kutch and a 6 MMTPA grinding unit in Surat, along with a captive jetty in Kutch, has a total debt of over Rs 8,000 crore, according to reports.
Moreover, the National Company Law Appellate Tribunal (NCLAT) observed, "The average liquidation value being Rs 1,080 crore and fair value being Rs 1,668 crore, the plan value submitted by resolution applicant (Nuvoco Vistas) is more than the fair value of the corporate debtor (Vadraj Cement)." The bid of Nuvoco Vistas, which acquired Vadraj Cement through its subsidiary Vanya Corporation, was approved by the committee of creditors (CoC) with a 100 per cent majority.
The resolution plan provided for payout to operational creditors, which included employees of the corporate debtor.
They had a claim of Rs 10.51 crore towards provident funds, pension fund and gratuity funds, in which Rs 6.30 crore was provided, and the balance amount was proposed to be paid on a pro-rata basis as per the resolution plan.
NCLAT observed that the resolution applicant, Nuvoco Vistas and the RP have also contended that as per the value of the resolution plan and payment to the secured financial creditors (SFC), the liquidation value of the employees is nil and the plan proposes to make payment to employees despite the liquidation value being nil.
"We are of the view that there is no inconsistency or illegality in the impugned order dated 01.04.2025 approving the resolution plan. The payout to the employees is as per the approved resolution plan. We do not find any substance in the submissions of the appellant, so as to interfere with the order approving the resolution plan. There is no merit in the appeal," NCLAT said.
They observed that the total amount of gratuity dues is Rs 2.86 crore, and that is well within the payout proposed for employees.
Moreover, the resolution professional has proposed a balance amount to be paid on a pro-rata basis is in accordance with the resolution plan.
"We do not find any inconsistency or contradiction in the resolution plan as contended by the appellant," NCLAT said.
Corporate Insolvency Resolution Process (CIRP) against Vadraj Cement commenced from February 2, 2024, after the NCLT admitted a plea filed by then Oriental Bank of Commerce (now Punjab National Bank) under Section 7 of the Insolvency & Bankruptcy Code.
Nuvoco is positioned as the fifth-largest cement maker in India. The Nirma group firm had started its operations in 2014 through a greenfield cement plant in Nimbol, Rajasthan. Later it acquired Lafarge India, which entered India in 1999 and Emami Cement in 2020.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
