NCLAT Greenlights Nirma's Nuvoco Vistas Acquisition of Vadraj Cement, Dismissing Challenge

The National Company Law Appellate Tribunal (NCLAT) has delivered a resounding verdict, dismissing a plea that sought to overturn the resolution plan put forth by Nirma-backed Nuvoco Vistas for the acquisition of Vadraj Cement. This pivotal decision clears the path for Nuvoco Vistas to proceed with its bid, bringing a significant insolvency case closer to its resolution.

The challenge was mounted by Kundan Care Products Limited (KCPL), another Resolution Applicant, which had raised serious allegations against the Resolution Professional (RP) and Nuvoco Vistas.

KCPL's petition claimed that there was collusion between the RP and Nuvoco Vistas, leading to manipulation of the voting process within the Committee of Creditors (CoC).

However, the two-member NCLAT bench, led by Chairperson Justice Ashok Bhushan and comprising Member (Technical) Barun Mitra, found these accusations to be without merit.

In its pronouncement, the Tribunal underscored that the Committee of Creditors had, with an overwhelming majority of 90.13%, approved Nuvoco Vistas' resolution plan, thereby upholding the sanctity of the commercial wisdom exercised by the financial creditors.

The tribunal's ruling effectively sets aside KCPL's application, which had sought to halt the resolution process and even initiate a fresh voting procedure.

The NCLAT observed that the allegations of procedural irregularities or manipulation were not substantiated by concrete evidence, reinforcing the integrity of the insolvency proceedings.

The journey for Vadraj Cement, previously known as My Home Industries Private Limited, through the Corporate Insolvency Resolution Process (CIRP) has been protracted.

The company was admitted into CIRP by the Ahmedabad bench of the National Company Law Tribunal (NCLT) on March 14, 2022. The initial deadline for completing the resolution process was extended multiple times, primarily due to the ongoing legal challenges and the need to finalize a viable resolution plan.

Vadraj Cement faced substantial financial distress, with financial creditors laying claims of approximately Rs 4,960 crore, while operational creditors sought around Rs 342 crore.

The successful resolution plan by Nuvoco Vistas is expected to address these liabilities and provide a path forward for the company.

Nuvoco Vistas, a prominent subsidiary of the diversified Nirma Group, is a major player in India's cement manufacturing sector, known for its extensive product portfolio and market presence.

Its successful bid for Vadraj Cement is poised to further consolidate its position in the competitive cement industry, potentially leading to synergies and expansion of its operational footprint.

With this landmark ruling, the NCLAT has not only upheld the integrity of the CIRP but also provided crucial clarity, allowing for the timely conclusion of the insolvency resolution for Vadraj Cement and paving the way for its integration into the Nirma Group's robust business empire.