New Delhi: Jindal Steel & Power Ltd, India’s third-largest producer of the alloy by market value, and two other groups have expressed interest in bidding for Reliance Naval & Engineering Ltd, Bloomberg has reported, citing people familiar with the matter.
Dubai-based shipping firm GMS and Kotak Special Situations Fund were among the others that registered to bid as of the February 28 deadline, the report added, quoting the people on condition of anonymity.
For Naveen Jindal’s Jindal Steel, Reliance Naval can be a captive client for the company’s shipbuilding plates, Vidya Rattan Sharma, managing director at the steelmaker told Bloomberg, confirming Jindal’s interest in bidding for the firm. She added that Jindal isn’t partnering with any company for the bid.
Backstory
On January 15, 2020, IDBI Bank dragged Anil Ambani’s Reliance Naval to the National Company Law Tribunal under the insolvency and bankruptcy code. The company owed the bank dues worth Rs 1,159.43 crore, Livemint had reported.
Reliance Naval had disclosed to the stock exchanges that it defaulted on loans worth Rs 9,492 crore, becoming the second company owned by Anil Ambani after Reliance Communications Ltd to go for insolvency.
Also read: Book Excerpt: The Unravelling of Anil Ambani’s Empire
Anil Ambani bought the company, which was earlier known as Pipavav Defence and Engineering Ltd, from the shipyard’s founder-chairman Nikhil Gandhi in 2015, to enter the defence sector. Back then, the firm was reeling under Rs 7,000 crore debt.
The company was later renamed to Reliance Defence and Engineering Ltd in January 2016, and then again renamed to Reliance Naval and Engineering.
This is the first company from the private sector to get a contract and license for building warships.
Regarding its NPA (non-performing asset) situation, in 2018, Reliance disclosed that the loans account had been either irregular or sub-standard even before it acquired the company, The Wire reported.
Also read: There Could Be Severe Consequences To Suspending India’s Insolvency and Bankruptcy Process
In the same year, Reliance Infrastructure – which had announced the acquisition of Pipapav Defence – issued a Rs 5,440-crore arbitration notice to erstwhile founder-promoters of Pipavav Defence, citing a breach of warranties around the state of affairs and governance standards of the company.
According to the Financial Express, several financial creditors have claimed over Rs 43,587 crore from Reliance Naval. The firm is facing claims from banks including the State Bank of India (Rs 1,965 crore), the Union Bank of India (Rs 1,555 crore), and the IDBI Bank (Rs 1,375 crore).
Other firms including Mumbai-based Mazagaon Dock, Russia’s state-owned United Shipbuilding Corporation, Danish shipping conglomerate AP Moller Maersk Group, among others have also expressed interest in buying the bankrupt shipyard.