Case Study

NCLT nods to Ramakrishna Forgings' bid to acquire JMT Auto

NCLT nods to Ramakrishna Forgings' bid to acquire JMT Auto The National Company Law Tribunal (NCLT) New Delhi bench has approved the resolution plan presented by the Kolkata-based, Ramkrishna Forgings Limited, in the corporate insolvency resolution process (CIRP) of JMT Auto (the Amtek Group listed subsidiary). Ramkrishna Forgings has agreed to offer Rs. 125 Crore to acquire JMT Auto, which has admitted financial liabilities of over Rs. 165 Crore.

Apart from Ramkrishna Forgings, RKG Fund-I had also submitted its resolution plan, but it was rejected by the Committee of Creditors by 100% vote share.

The resolution plan by Ramakrishna Forgings which has been approved by the NCLT offers the financial creditors Rs. 111 Crore against their total claims of Rs. 168 Crore, while operational creditors get Rs 13 Crore against their total claims of Rs 52 Crore.

The NCLT recorded in the order that the fair market value of JMT Auto was Rs 144.19 crores and the liquidation value of was arrived at Rs.105.03 crores. The successful bidder has agreed to pay 66% of the total amount claimed by various stakeholders and it is 119% of the liquidation value of the Corporate Debtor. It was also noted that the acquirer Company is a financially sound company with a net worth of Rs. 1094 crores in FY2022.

JMT Auto, an auto component manufacturer from Jamshedpur, Jharkhand, went into corporate insolvency resolution process (CIRP) in February 2022 for the default on payment of Rs 52 crores to the country’s third largest private sector lender, Axis Bank, who filed an insolvency application against JMT Auto before the NCLT which was admitted therein. The Resolution Plan submitted by Ramkrishna Forgings Limited was earlier approved by the Committee of Creditors with 84.61% votes in its favour. SBI was the sole dissenting creditor. The company owed Rs 220 crore to its creditors, out of which Rs 168 crore is owed to financial creditors. Axis Bank has the largest claim of Rs 77 crore, followed by IDBI Bank's claim of Rs 58 crore and State Bank of India’s claim amounting to Rs 26 crore.