Naveen Jindal-promoted Nalwa Steel and Power emerged as the highest bidder for McNally Bharat Engineering, outbidding BTL EPC (formerly Bengal Tools EPC) at an auction that ended, said two people aware of the development.
Nalwa Steel offered Rs 424.3 crore at the challenge mechanism auction held by lenders outbidding BTL EPC’s Rs 411.63 crore.
Kolkata-based McNally Bharat, promoted by the Khaitan family of Williamson Magor Group, is undergoing insolvency proceedings.
Last month, lenders decided to hold a second-round challenge auction to maximise recovery since the offers in the first round were very low, said people cited above. In the first round, lenders had received the highest offer of Rs 319 crore, which was much below their expectations, one lender said. The second round saw nine bidding rounds between Nalwa Steel and BTL, said people cited above.
The offer of Rs 424.3 crore will equate to a recovery of less than 10% for McNally Bharat’s lenders. Nalwa will pay ₹161 crore upfront to lenders and the remaining amount is earmarked for payments towards non-fund-based limits if guarantees given by lenders are invoked, one of the persons cited above said.
Nalwa Steel and Power did not respond to ET’s request for comments.
Resolution Professional Anuj Jain, backed by BSRR Affiliates has admitted Rs 4,839.7 crore from financial creditors, according to the company’s website.
Government-promoted National Asset Reconstruction Company also gave a Rs 130 crore offer to acquire McNally Bharat loans. However, lenders rejected the offer since it was below their expectations.
The RP received 17 expressions of interest, including from Megha Engineering and Infrastructure, Nalwa Steel, BTL EPC, JM Financial Asset Reconstruction Company and Tauman Engineering, as reported by ET on October 22, 2022.
Reviving an engineering, procurement and construction (EPC) company under the Insolvency and Bankruptcy Code has been challenging for lenders. EPC companies, including Punj Lloyd, IVRCL and Lanco Infratech, that were undergoing corporate insolvency faced liquidation since lenders did not receive any favourable offers.
In the middle of 2022, the Khaitan family had completely exited Eveready Industries, a maker of dry batteries and flashlights by selling their stake to the Burman family, promoters of Dabur.
The sale of Eveready Industries is linked to the stress faced by McNally Bharat. Khaitan had pledged shares of Eveready Industries to finance McNally Bharat; however, lenders invoked shares after the EPC company defaulted on loans. Following the invocation, the Khaitan family’s holding fell to 4.84% in December 2021 from 27.39% in December 2019.
