The Chennai bench of National Company Law Tribunal (NCLT) has ordered initiation of corporate insolvency resolution process (CIRP) against South-based sugar major Thiru Arooran Sugars, acting on a petition filed by State Bank of India.
The Chennai bench of National Company Law Tribunal (NCLT) has ordered initiation of corporate insolvency resolution process (CIRP) against South-based sugar major Thiru Arooran Sugars, acting on a petition filed by State Bank of India (SBI). SBI had dragged the company to NCLT alleging a default of Rs 149.36 crore.
An SBI-led consortium including Punjab National Bank (PNB), IDBI Bank, UCO Bank, Union Bank of India and Standard Chartered Bank had granted financial assistance in the nature of credit facility to the company for an amount of `159.94 crore in 2016. As repayment was not made as agreed, the account was declared as NPA on March 31, 2018. Though the bank though had issued legal notice to the company asking it to pay up the outstanding dues, it did not elicit a response, forcing the lender to move the Debt Recovery Tribunal (DRT).
Ordering the CIRP, the NCLT bench of BSV Prakash Kumar – member -judicial and S Vijayaraghavan – member- technical, observed that since no defence has come from the company regarding the existence of debt and default, the bench was of the considered view it is a fit case for admission.
According to Thiru Arooran Sugars’ annual report 2017-2018, the operations of the company during the fiscal was impacted by uneconomical realisations on sale of sugar, reduced availability of sugarcane, apart from lower recovery of sugar and lower production of alcohol due to reduced availability of raw material, namely molasses. The company had reported loss after tax of `45 crore.
The company, which was promoted by the late VS Tyagaraja Mudaliar in the early 1950s, is now managed by RV Tyagarajan as chairman and managing director. He had also served as president of Indian Sugar Mills Association for three consecutive terms during 1987-88, 1988-89, and 2000-2002.
The company has been going through a rough patch with loans getting defaulted, coupled with mounting losses since 2017. To make things worse, the Economic Offences Wing (EOW) of the Cuddalore district police had last month questioned RV Tyagarajan on the charges of alleged cheating of over 1,500 sugarcane farmers to the tune of `80 crore. According to reports, Tyagarajan had allegedly forged documents and taken loans in the name of sugarcane growers from Cuddalore and Thanjavur who had supplied cane to the mill without their knowledge and in connivance with bank officials. Bank officials had sent notices to farmers for defaulting on the loans.