Embed Size (px)
Citation preview
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 1/6
Jyoti Mukul Last Updated at August 16, 2018 00:08 IST
ALSO READInsolvency proceedings:Tata Steel readyingblueprint to buy BhushanPower
IBC process: Creditors pickTata Steel as H1 bidder forBhushan Power
Tata Steel likely to have anedge in battle for BhushanPower
Insolvency: Essar Steellenders face tough call; CoCmay seek fresh bids
Insolvency process:Bhushan Power CoC maytake a call on revised bidstoday
JUST IN Search
News
You are here: Home » Opinion » Columns
Revisions undermine biddingClosure on a pre-agreed date will make the IBC process both credible and ethical
In cases where bidding is the norm for the sale or lease of an asset,or even for government procurement, it is accompanied by adisclosure on the last date of bid submission. Under the currentinsolvency resolution processes that is going on for a host ofcompanies, there have been instances of bids being revised,sometimes even after the last date.
While the Insolvency and Bankruptcy Code (IBC) empowers thecommittee of creditors (COC) to decide on which bid to accept, theSupreme Court set the rule by telling the National Company LawAppellate Tribunal on July 17 that it was not empowered to permitor reject o�ers in the Bhushan Power & Steel (BPSL) case.
Tata Steel, that was the winner after two rounds of bidding forBPSL, had gone to the apex court challenging the NCLAT directionto allow bids for a third time. Yet, revised bids were called. Thewhole episode started after the UK-based Liberty House, which hastwo insolvent companies in its pocket, decided to submit aresolution plan on February 20 after the bid submission date onFebruary 8. Since this put the creditors in doubt, the Tata Steel bidcould not be �nalised though by June-end bids had been calledtwice over and Tata Steel had communicated that it was thehighest quali�ed bidder for BPSL.
This leads us to the question whether the last date for bidsubmission has any sanctity or can bidders be permitted to reviseo�ers as many times as they want? More importantly, should theauthorised entity to whom a bid is submitted accept revisions ifthey appear more lucrative?
Creditors will any day prefer a higher bid so that the haircuts forthem are smaller and, hence, the risk of being questioned forletting an asset go cheap is somewhat mitigated. Take the case of
BS APPS BS PRODUCTS BS E-PAPER BS LEARNING Hi, INSOLVENCY AND BANKRUPTCYBOARD OF INDIA
Dual-class shareholding will take more time
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 2/6
READ MORE ON IBC BILL INSOLVENCY AND BANKRUPTCY CODE
NATIONAL COMPANY LAW APPELLATE TRIBUNAL COC COMMITTEE OF CREDITORS TATA STEEL
BHUSHAN POWER & STEEL BPSL CASE ADANI WILMER LIBERTY HOUSE TATA STEEL BID
BHUSHAN STEEL BIDS OPINION COLUMNS
Advertisements
Ruchi Soya, where the bid put forth by Adani Wilmer, as reportedby Business Standard, was higher than that of Patanjali after arevision.
The value of various resolution plans is never declared bycreditors. BPSL was a peculiar case where Abhishek Manu Singhvi,Tata Steel lawyer, openly stated in the NCLT that the Liberty Housebid was higher by “only Rs10 billion”. The Liberty House o�er, heargued, came after it was informed that the Tata Steel bid was thehighest. Given that, he said, the Liberty House o�er should not beconsidered.
This clearly implies that if bid value secrecy is not maintained, then revision of bids even after the duedate can happen endlessly, deteriorating the morale of employees of the insolvent company and thecondition of plant and machinery.
Outside the resolution process, bidding for procurement has had a tradition of allowing the secondpreferred bidder to match the price of the most preferred bidder even after the closure of the �rstround of bidding. Earlier, this was practised to give purchase preference to PSUs and now it is used forMake in India. The methodology for these revisions, however, is well laid out.
As recently as last week, the bidding method for the second auction for small �elds of oil and gasallowed bidders to “revise or change” bids, but before the bid closing date. Here, the winner will bedecided on the basis of the revenue it is willing to share with the government at the lower revenue point(LRP) and the highest revenue point (HRP). Bidders, however, are expected to revise their bids once they�nd out bid value of rivals or if they are able to form a cartel with other bidders.
While revision of bids, in principle, may not be harmful for the �rm that has put assets on o�er, it canvitiate an otherwise transparent process. Closure on a pre-agreed date will make the process bothcredible and ethical if bidding is transparent where everyone can see each other’s bid value during theprocess itself, making it a true auction.
First Published: Thu, August 16 2018. 00:07 IST
RECOMMENDED FOR YOU
Subscribe to Business Standard Digital & get 12 months WSJ online worth Rs.
Business Standard book for IBPS: 3000 GK Questions: GST, Budget 2017, Demonetisation
PREVIOUS STORY NEXT STORY
Letter to BS: Sebi could do well
with the power to intercept calls
Letter to BS: Why e-commerce
�rms should ask for identity proof
of a buyer
Letter to B
scheme a
health car
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 3/6
Opinion: Overview GO LATEST NEWS
Letter to BS: Sebi could do well with thepower to intercept calls
You Might Also Like
Promoted Stories
Recommended by
Promise of a new India News Digest: Funding forairlines, BS Fund Cafe, RBIdividend, and more
The state of the economy
S Gurumurthy's appointment toRBI board may lead tointeresting times
Better than iPhone? SamsungGalaxy Note 9 creates �utters inApple camp
Want a car, fridge or doublebed? Why renting might bebetter than buying
The entrepreneur checklist: doyou have these 5 qualitiesessential to entrepreneurialLiveInStyle.com
Indians Over 55 Can TryInnovative New Hearing AidsFor FreeFit and Healthy 247
Do Not Buy Car Insurance -Until You Explore these Optionsregreatcarinsuranceok.live
The Cost Of New DentalImplants Will Leave You Smiling!Explore Nowdodentalimplantslove.live
He earns Rs. 200 a day. Don't lethim lose his child because ofMoney.Ketto is the best CrowdfundingPlatform and Website in India -Ketto.org
Buy 1 Cr Life Insurance Plan @Rs 680/M*termlife.policybazaar.com
IN THIS SECTION ALL
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 4/6
Letter toBS: Why e-commerce�rms
should ask for identity proof of a buyerLetter to BS: PM'sAyushman scheme aprecursor to Indian healthcare system
Mayawati's math forupcoming assembly pollsto emerge as kingmaker in2019Advertisement
More >
MOST POPULAR
Bajaj group knocks outAditya Birla from 3rd spotin m-cap battle
Reliance JioPhone 2 �ashsale today at 12 noon:Know price, recharge plans
Why Mukesh Ambani'sReliance, not Walmart, isAmazon's real rival in India
As cash in�ow rises,graphite makers in Indiaface the problem of plenty
Advertisement
LATEST NEWS
The pros and cons of RBI ratecutAjit K Ghose
What is required is change of growthstrategy, from foreign �nance-led toexports & domestic growth
Presidential Polls: NitishKumar keeping the grandalliance on tenterhooks
Until a couple of months ago, Kumar wasin favour of a united opposition
READ SHARE COMMENTED
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 5/6
EDITORIAL COMMENT
Jet's bluesThe crisis re�ects a deeper strategicweakness
Promise of a new IndiaPM's message was for an increasinglyprosperous nation
Time for reformJudiciary should also play by the book
More >
MOST POPULAR COLUMNS
Large no of Kanwariyas onpilgrimage points towardsan unemployment problem
An estimate of 30 million kanwariya pilgrimsthis year may not be too far o� the mark.What does this number tell us about theemployment situation in the country?
Mr Modi's electoral balancesheet
Apart from whatever challenges theopposition parties can put up from outside, achallenge that can come from within shouldnot be ignored
Europe's trade coup
Ensuring that the EU does not face the sametari�s as China is particularly signi�cant,because European suppliers are Chineseexporters' main competitors
MORE ON MARKETS:
8/16/2018 Revisions undermine bidding | Business Standard Column
https://www.business-standard.com/article/opinion/revisions-undermine-bidding-118081600003_1.html 6/6
STOCK MARKET LIVE
PORTFOLIO
COMMODITY MARKET
UPCOMING IPO
PERSONAL FINANCE
STOCK MARKET NEWS
DERIVATIVES
MUTUAL FUNDS
GOLD PRICE
SENSEX
QUICK LINKS
A B C D E F G H I J K L M N O
P Q R S T U V W X Y Z
1 2 3 4 5 6 7 8 9
A B C D E F G H I J K L M N O
P Q R S T U V W X Y Z
BROWSE STOCK COMPANIES
BROWSE MUTUAL FUNDS
Adani Ports Asian Paints Axis Bank B P C L Bajaj Auto Bajaj Finance Ltd Bajaj Finserv Bharti Airtel Bharti Infra.
Cipla Coal India Dr Reddy's Labs Eicher Motors GAIL (India) Grasim Inds H D F C HCL Technologies HDFC Bank
Hero Motocorp Hind. Unilever Hindalco Inds. Hindustan Petroleum Corporation Ltd ICICI Bank
Indiabulls Housing Finance Indian Oil Corporation Ltd. IndusInd Bank Infosys ITC Kotak Mah. Bank Larsen & Toubro
Lupin M & M Maruri Suzuki NTPC O N G C Power Grid Corpn Reliance Inds. St Bk of India Sun Pharma. Inds.
Tata Motors Tata Motors-DVR Tata Steel TCS Tech Mahindra Titan Company UltraTech Cement Ltd UPL Ltd
Vedanta Wipro Yes Bank Zee Entertainment
TRENDING ON BS
FROM BS WEBSITE
Home
Companies
Markets
Opinion
Politics
Technology
Specials
Personal Finance
Latest News
Today's Paper
RBI Policy
General News
General Videos
General Photo Gallery
Events
Authors
Education
ABOUT US
About Us
Code of Conduct
Terms & Conditions
Cookie Policy
Disclaimer
InvestorCommunication
List of our GSTregistration number
SUPPORT &CONTACT
Partner with Us
Careers
Advertise with Us
Contact Us
Feedback
Browser Support
Sitemap
SUBSCRIBE
E-Paper
BS Magazines
Portfolio Tracker
BS PRODUCTS
Smart Investor
BS Hindi
BS Motoring
BS Books
B2B Connect
iPhone
iPad
android
wap
BS Banking RoundTable 2017
BS Fund Cafe 2017
Budget Insight Out
ELECTION
Karnataka Election 2018
SPORTS
IPL 2018
FIFA World Cup 2018
CONNECT WITH BS
Google+
Youtube
RSS
INDEX STOCKS
ets #BSWeekend #BSTech #GST #BSSpecial
