NCLAT Upholds Nuvoco Vistas' Acquisition of Vadraj Cement Amid Employee Gratuity Concerns

The National Company Law Appellate Tribunal (NCLAT) has rejected an appeal against Nuvoco Vistas Corporation's acquisition of Vadraj Cement. This decision supports the earlier ruling by the National Company Law Tribunal (NCLT) in Mumbai, which approved Nuvoco Vistas' plan on April 1, 2025. The plan involves an upfront payment of Rs 1,800 crore.

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Vadraj Cement, previously owned by ABG Shipyard, has significant assets including a 3.5 MTPA clinker unit in Kutch and a 6 MMTPA grinding unit in Surat. The company also has a captive jetty in Kutch. Reports indicate that Vadraj Cement's total debt exceeded Rs 8,000 crore.

Nuvoco Vistas' Acquisition Details

Nuvoco Vistas acquired Vadraj Cement through its subsidiary, Vanya Corporation. The Committee of Creditors (CoC) unanimously approved the bid. On June 21, Nuvoco Vistas announced that Vanya Corporation had completed the acquisition according to the resolution plan approved by the NCLT.

The resolution plan includes provisions for operational creditors, such as employees. Employees had claims amounting to Rs 10.51 crore for provident funds, pension funds, and gratuity funds. Of this, Rs 6.30 crore was allocated, with the remaining amount proposed to be paid on a pro-rata basis.

Financial Valuation and Employee Payouts

NCLAT noted that the average liquidation value of Vadraj Cement was Rs 1,080 crore while the fair value stood at Rs 1,668 crore. The plan value submitted by Nuvoco Vistas exceeded the fair value of Vadraj Cement.

The tribunal observed that despite the liquidation value for employees being nil, the resolution plan still proposes payments to them. The total gratuity dues were Rs 2.86 crore, which fits within the proposed employee payout.

Legal Proceedings and Observations

The Corporate Insolvency Resolution Process (CIRP) for Vadraj Cement began on February 2, 2024. This followed a plea by Oriental Bank of Commerce (now Punjab National Bank) under Section 7 of the Insolvency & Bankruptcy Code.

NCLAT stated there was no inconsistency or illegality in approving the resolution plan dated April 1, 2025. "We do not find any substance in submissions of the Appellant," said NCLAT regarding objections to employee payouts.

Nirma Group's Expansion

Nuvoco Vistas is part of the Nirma group and ranks as India's fifth-largest cement producer. It began operations in 2014 with a greenfield plant in Nimbol, Rajasthan. The company later acquired Lafarge India and Emami Cement in 2020.

With this acquisition, Nuvoco Vistas' consolidated capacity has reached 31 MMTPA. This expansion strengthens its position in India's cement industry.

With inputs from PTI