IDBI Bank had classified the company as a wilful defaulter.
Even as the broader market gained 0.6% on Thursday, as measured by movement of the BSE-Sensex, the Ruchi Soya Industries stock was pummelled, ending the day 13.6% lower, as investors deserted the stock following intimation by the company to the stock exchange that its lender, IDBI Bank had classified the company as a wilful defaulter. In a letter filed with the stock exchange, the company said, “we wish to inform you that the IDBI Bank vide its letter dated 8th December, 2017 has declared the company as a Wilful Defaulter.” It added that “the company is in consultation with its legal counsels, to challenge the decision by taking appropriate legal action that may be required in this regard.”
Ruchi Soya Industries was among the 28 large stressed accounts in the second list released by Reserve Bank of India in August. The last date for resolution of the accounts before they would be required to be referred to National Company Law Tribunal (NCLT) was December 13. The company, which makes and markets edible oils, soya products, health foods, bakery products and has a wind power facility posted a loss of Rs 1,257 crore in the year ended March, 2017, greater than the loss of Rs 1,062 crore posted in the previous year, this was on the back of a 33% decline in revenues. The company had a debt of Rs 4,556 crore at the end of last fiscal, which doesn’t indicate a high-debt equity ratio, but the company’s ability to service its debt has been severely limited by its cash flows.
During the period ended March 2017, Ruchi Soya was able to meet debt servicing obligations of Rs 671 crore, only with inflows from sales of investments and assets, as its operating cash flows were only Rs 586 crore. The company has been defaulting on debt servicing since May 2016 and till the end of the last fiscal, it had overdue principal repayments of Rs 2,819 crore and interest of Rs 124 crore. The promoters of the company have a 57.3% stake in the company, but almost 55% of these holdings are pledged. The Ruchi Soya stock hit a high of R18.80 earlier in the day before plumbing to a new 52-week low of Rs 15.75, and closing the day at Rs 16.25. The stock had hit a 52-week high of Rs 33.75, just last month.