NCLAT Sets Aside Plea Against Nuvoco Vistas Acquisition of Vadraj Cement

The 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 has on April 1, 2025 approved Nuvoco Vistas's plan for Vadraj Cement, which includes an upfront payment of ₹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 the Nuvoco Vistas' 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 captive jetty in Kutch, total debt was over ₹8,000 crore, according to reports.

Moreover, the National Company Law Appellate Tribunal (NCLAT) over the valuation observed:" The Average liquidation value being ₹1,080 crore and fair value being ₹1,668 crore, the Plan value submitted by Resolution Applicant (Nuvoco Vistas) is more than fair value of the CD (Vadraj Cement)." Nuvoco Vistas, which acquired Vadraj Cement through its subsidiary Vanya Corporation, bid was approved by the Committee of Creditors (CoC) with a 100% majority.

Earlier on June 21, Nuvoco Vistas Corporation had said Vanya Corporation has completed the acquisition of Vadraj Cement in accordance with the terms of the resolution plan approved by the NCLT.

The Resolution Plan provided for payout to the Operational Creditors, which included the employees of the CD.

They had a claim of ₹10.51 crore towards provident funds, pension fund and gratuity funds, in which ₹6.30 crore was provided and the balance amount was proposd to be paid on a pro-rata basis is in accordance with the Resolution Plan.

NCLAT obserced that the resolution applicant, Nuvoco Vistas and the RP have also contended that as per value of Resolution Plan and payment to the Secured Financial Creditors (SFC), the liquidation value of the employees is Nil and the Plan purposes 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 submissions of the Appellant, so as to interfere with the order approving the Resolution Plan. There is no merit in the Appeal,"said the National Company Law Appellate Tribunal (NCLAT) They observed that the total amount of gratuity dues is only ₹2.86 crore and that is well within payout proposed for employees.

Moreover, the resolution professional has proposed 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," said NCLAT.

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.

With this acquisition, Nuvoco Vistas's consolidated capacity has reached 31 MMTPA.