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The resolution of the shipyard at Pipavav run by Reliance Naval and Engineering Ltd could falter over revelations that a top official with Swan Energy Ltd, one of the two contenders for the bankrupt shipbuilder, was a director on the board of a company promoted by the erstwhile original promoter of the yard until recently.
Nikhil Merchant, Managing Director of Swan Energy, submitted his resignation from the directorship of Navi Mumbai Smart City Infrastructure Ltd on December 6, months after filing a resolution plan sometime in September in partnership with Hazel Mercantile Ltd to buy Reliance Naval under India’s bankruptcy law.
The resignation came a few days before the Swan Energy-Hazel Mercantile team submitted a revised resolution plan on December 13.
BusinessLine has seen a copy of the resignation letter written by Merchant to the board of directors of Navi Mumbai Smart City Infrastructure, citing “pre-occupation in upcoming projects of our group companies and paucity of time”.
Navi Mumbai Smart City Infrastructure, the entity controlled by SKIL Infrastructure Ltd and Nikhil Gandhi Family Trust, is understood to have defaulted on bank loans and has been classified as a non-performing asset (NPA).
SKIL Infrastructure, promoted by Nikhil Gandhi, was the original promoter of the shipyard named Pipavav Defence and Offshore Engineering Co Ltd, before selling it to the Reliance ADA Group in 2015.
“Nikhil Merchant’s association with Navi Mumbai Smart City Infrastructure, a defaulter company, would make him ineligible under Section 29A of the Insolvency and Bankruptcy Code to participate in the resolution process of Reliance Naval and Engineering,” said a person tracking the resolution process.
Original resolution plan
“When the original resolution plan was submitted in September, he was not compliant with Section 29A of the IBC,” the person said, asking not to be named.
Resigning from the board of Navi Mumbai Smart City Infrastructure, a week before submitting a revised offer, is seen as an “after thought” by Merchant to skirt a legal impediment and become eligible for the resolution process, the person said.
The resignation dated December 6 was filed with the Registrar of Companies on December 20, according to sources.
Nikhil Merchant did not respond to an e-mail seeking comment.
The Swan Energy-Hazel Mercantile bid is understood to have an edge over the resolution plan submitted by Jindal Steel and Power Ltd (JSPL), though both the bids offer hardly 5-10 per cent recovery of the unpaid dues of over ₹13,000 crore, making the lenders wary of the resolution plans.
The Committee of Creditors is expected to vote on the resolution plans soon.
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