Auditors detect ‘fraudulent’ transactions in Andhra Cements
The Resolution Professional of Andhra Cements Limited — Kirit Pujara –has filed application for avoidance of transactions with the Amravati bench of the National Company Law Tribunal on 07 December 2022 classifying certain transactions as preferential under Section 43 of the Code, the Guntur-based company informed the exchanges on 8 December 2022.
The resolution professional had appointed BDO India LLP to conduct Transaction Review Audit (TRA) of Andhra Cements as per the provisions of the Insolvency and Bankruptcy Code 2016. Further, the RP received the final TRA report dated 24 November and an addendum to the TRA report dated 30 November 2022. In consideration of the inputs received from the Auditor, the RP filed an application for avoidance of transactions with the NCLT.
Andhra Cements, which owes around Rs 1,600 crore to different creditors, was dragged to insolvency court by Pridhvi Asset Reconstruction and Securitisation Company Limited for defaulting on a payment of over Rs 800 crore.
The Amravati bench of the National Company Law Tribunal (NCLT) admitted Pridhvi Asset Reconstruction and Securitisation Company Limited’s insolvency petition on 28 April 2022. The NCLT appointed Nirav Kirit Pujara as the resolution professional.
Dalmia Cement (Bharat) Limited and Sagar Cements Limited are in the race for acquiring Jaypee Group’s Andhra Cement, which is undergoing Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code.
Two other firms — Jindal Poly Films Ltd and Khandwala Finstock Private Limited – which had submitted Expression of Interest (EoI) for bidding for Andhra Cement are now out of the race.
The Jaypee Group company is facing financial distress for a long time and posting losses for over a decade, and its revenue has come down from Rs 515 crore on 2007-08 to Nil in 2021-22. At the end of 2021-22, its consolidated losses have reached Rs 236 crore.
Andhra Cements Limited, incorporated on 9th day of December 1936 under the Indian Companies Act 1913, and had since then experienced several changes till date with respect to the promoters and management.
Earlier, the Management of the Company transferred from the then promoters, Bennett Coleman Co. Ltd, to Duncan Group of GP Goenka who had acquired the Company in the year 1994 from BIFR. Later due to financial crises the production activity of Cement was stopped and the both the plants shut-down during the period from 2010-12 and all the production and all other operations were closed.
In 2012, the present promoters — Jaypee Development Corporation Limited (Jaypee Group) — acquired about 60% shareholding of the Company and took over the Management control with effect from February 2012.
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