A fresh auction for steel roll maker Gontermann-Peipers India Ltd has been set on November 11, following the direction of the National Company Law Appellate Tribunal (NCLAT), even as the move may face fresh legal challenges.
The liquidator of GPI has notified the new date for the auction which is open to participation to any party who is willing to take the company on a “going concern” basis. Initial indications suggest that the auction may fetch a large number of participants, surpassing the previous round.
The reserve price of the corporate debtor GPI has been fixed at Rs 91 crore, higher than the price discovered in the first round. Snaefell Heights LLP, an entity linked to Calcutta-based real estate group Srijan Realty, had put in a bid of Rs 88 crore in the auction which took place in September 2021.
The auction was subsequently challenged by many parties before the NCLT, Calcutta, which ordered a reauction of the GPI. On September 30, 2022, the NCLAT upheld the judgment of the lower tribunal.
Closed in 2016, the GPI factory on Diamond Harbour Road near Joka sits on a 25.35- acre plot. Proximity to the city and Joka-Esplanade Metro, which is nearing completion, makes the plot lucrative for real estate development.
At least one source aware of the process claimed, many parties, mostly from the real estate sector, are showing interest in the new auction. How many of them would eventually make a meaningful bid will, however, be known only on November 11.
One of the interested parties keen to participate in the fresh auction is JSW Steel Ltd, which was also one of the parties before the appellate tribunal, seeking a reauction. India’s largest private sector steel maker by domestic capacity had then promised to make a bid of Rs 90 crore for GPI before the tribunal.
JSW, a manufacturing company, will have to compete with realtors if it is keen to take over GPI, which can be a captive plant for the steel maker.
Indian steel firms are importing steel rolls in the absence of domestic capacity, which can be partially filled up by the Calcutta firm if the old machines are put to use.
There were about 500 workmen and officials on the rolls of the company, which used to be majority owned by Pramod and Vinod Mittal, younger brother of steel czar Lakshmi Niwas Mittal. A section of the officers have waded into the legal process, rooting for JSW’s proposal.
“We feel that the plant can not only be revived, but expanded in the future. However, if real estate firms acquire GPI, our fate will be uncertain,” Rahul Roy Chowdhury, a part before the tribunal proceedings and an officer of GPI, argued.
Out of the total land available, only 2.76 acres is factory land while 22.14 acres continue to remain sali and barga land, which can be used for real estate development.
At least one opinion suggests that the sale of corporate debtors as a going concern along with its assets, land, building, plant and machinery, inventory, stores, and spares, would not preclude the successful bidder to take up any other business, such as real estate.
Legal challenge
The fresh auction will be subjected to the view taken by the Supreme Court as Snaefell Heights LLP may prefer an appeal. Liquidator Raj Singhania may also join the suit.
“As an officer of the court, I am bound by the judgment of the NCLAT and hence have called for a fresh auction,” Singhania said.
As the liquidator, Singhania is in charge of the auction process. The NCLAT judgment had found “material irregularity” in the process followed by the liquidator.
