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Billionaire Mukesh Ambani’s Reliance Industries has bought over distressed bank assets of Vadodara-based Kemrock Industries and Exports Ltd , a plastics and composites maker, through an e-auction.
The company was put up for sale by Allahabad Bank, the leader of a consortium of 11 banks.
While RIL did not disclose its winning bid’s size, the auction notice by the lenders put the reserve price for the asset at just over ₹673 crore.
The sale, carried out under the SARFAESI Act, was by Allahabad Bank, JM Financial Asset Reconstruction Company and Edelweiss Asset Reconstruct Company (assigned from other lenders), Karur Vysya Bank, Union Bank of India, State Bank of India and ICICI Bank.
The notice also gave the claim amount from the asset to be ₹1,652.18 crore. Other claims against the company included ₹1.41 crore by the EPFO, ₹205.77 crore by the Central Excise and Customs Department and a VAT liability of ₹82.16 crore.
Kemrock manufactured fibre-reinforced composites that were used for the aerospace industry. A 2013 news report by Reuters quoted Kalpesh Patel, CMD, Kemrock, saying that the factory was running at just 15-20 per cent capacity as banks refused to lend further working capital to the business.
He said that he was at the time looking for the US-based distressed debt investors to raise funds. In 2015, the company was registered as a sick unit with the Board of Industrial and Financial Reconstruction and in 2016, Patel – the founder and CMD – was on the banking industry’s wilful defaulters list.
The listed shares of the company have been suspended from trading on the stock exchanges.
With this acquisition, Reliance, for its part, will now get a foothold in the composites and carbon fibre business.
Composites are used in a variety of applications and industries such as renewable energy, mass transportation, infrastructure and a host of other industrial products.
Additionally, a key raw material for the business is petrochemicals, of which RIL is among the biggest producers in India.
In a press statement, RIL said it is in the process of complying with the necessary formalities for acquisition of assets.
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