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Investors eye Nagarjuna Oil Corporation for insolvency resolution bid.

Nagarjuna Oil Corporation Ltd. (NOCL) has attracted interest from at least three to four strong investors, including public sector firms and both foreign and Indian investors, as per the expression of interest (EoI) floated by the resolution professional (RP). A total of around 20 investors have bid for the resolution plan.
According to sources, the resolution process may have to go for an extension of 90 more days beyond the 180-day deadline, which ends on January 20, as the process is yet to be completed.

The bidders' list includes public sector players and both foreign and Indian investors, said a source, who requested for anonymity.

In August 2016, Hyderabad-based Nagarjuna Oil Refinery Ltd, the promoter of NOCL, had informed the exchanges that various prospective investors, including public sector companies such as Indian Oil Corporation, had sought information on NOCL's 6 million metric tonnes per annum (MMTPA) petroleum oil refinery project at Cuddalore, around 200 kilometres south of Chennai.

PSUs like HPCL and ONGC and foreign investors like Shell have made moves to acquire NOCL but none of them fructified.

"A couple of strong bidders are still in the fray and they have asked for additional time to submit their bids to the RP, which will be evaluated by the Committee of Creditors (COC). The bid found suitable by the COC will be sent to the NCLT (National Company Law Tribunal) for approval," said a source close to the development.

The RP was not available for a comment.

In response to an email seeking comments, Nagarjuna Group Chairman K S Raju said, "It is a fact that there are several parties seriously interested in NOCL. Being a large and complex project, it does take time for parties to conduct due diligence and, hence, the need to give additional time. The fact that they are itself proves that there is a high prospect for a successful resolution within the available time frame and the NOCL refinery project, which is a national asset, will be built and will have a bright future. The resolution professional, bankers and all stakeholders are working diligently toward this."

With the 180-day deadline set by the NCLT for the resolution process ending on January 20, the COC can seek a single extension of 90 days, which could end on April 20, 2018. The COC has to select a resolution plan and submit it to the NCLT a month before the last date of the resolution period. If there are no successful bidders, the company would be liquidated, which might have an impact on the promoters' guarantee to the extent of Rs 50 billion, said sources.

Responding to this, Raju said, "It is common knowledge that if a resolution does not take place, any company would go into liquidation. We do not believe that there is a cause for concern in our case. In any case, our fertiliser business is not directly connected with NOCL".

The company has around Rs 90 billion of debt, of which around Rs 80 billion is in the form of bank loans, by around 15 banks. Salaries to the tune of Rs 500-600 million are also pending, which might be cleared as part of the resolution plan. Once the recovery is made and the vendors, employees and others are repaid, the shareholders would be paid based on the COC's approval.

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