Majority lenders back Maharashtra Seamless bid for United Tubulaar, NCLT reserves order

V Rishi Kumar Hyderabad | Updated on May 11, 2018

The bid of Area Projects filed after the scheduled deadline by the Insolvency Resolution Professional and allegations of financial wrongdoings have delayed in finalisation of award of bid to Maharashtra Seamless Ltd (MSL) for the debt-laden United Seamless Tubulaar (UST).

The IRP had chosen the bid of MSL for UST, a joint venture between the Kamineni Group and UMW of Malaysia.

The National Company Law Tribunal, Hyderabad, heard the matter, including petitions regarding financial wrongdoings, and posted the case for orders on May 15. After the bid of Maharashtra Seamless, a DP Jindal Group company, was finalised for ₹477 crore, by the IRP, which was assisted by the auditing firm Brahmayya & Co, Area Projects, which had been part of the earlier bid process came up with a bid of ₹490 crore, ₹13 crore more than the initial approved bid.

International lenders, who constitute the majority, put forth to NCLT, that they have exercised due diligence in approving the bid submitted by Maharashtra Seamless.

While MSL was an industry leader in the sector, Area Projects lacked financial credibility and did not submit source of funds to complete the bid.

Rachakonda Murali, who is presiding over the matter, is also looking into an application filed by the IRP concerning fraudulent transactions to the tune of ₹160 crore.

Indian Bank debt

These related to certain trade advances made without proper documentation. The IRP had contended that this could have facilitated repayment of Indian Bank's debt, which is a common lender across both entities.

The majority lenders criticised the action of Indian Bank, which in a petition made claims against the IRP and the audit firm Brahmayya & Co, after the resolution period.

They contended that this was made with the intention of derailing the resolution process.

A source close to the matter said, “It is rather strange for a public sector bank to have approved the bid submitted by Area Projects, which has no financial credibility.”

Published on May 11, 2018

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