Patanjali’s Ruchi Soya plan hits a speed breaker; DBS to move NCLT

Updated: May 8, 2019 7:09:27 AM

Adjourning the hearing, the two-member NCLT bench also asked the resolution professional (RP) to submit a summary of how Patanjali intended to fund the acquisition.

Ruchi Soya, DBS, NCLT, Patanjali, resolution professional, RP, DBS bank, industry, newsRuchi Soya resolution: DBS to move NCLT against Patanjali?s Rs 4,350 crore plan

By Mitali Salian

DBS Bank-Singapore told the Mumbai National Company Law Tribunal (NCLT) on Tuesday it would move the tribunal against Patanjali Ayurved’s proposed Rs 4,350-crore resolution plan for debt-laden Ruchi Soya. The foreign bank claimed it has not received a fair value on assets although it enjoys the status of a first charge holder.

Adjourning the hearing, the two-member NCLT bench also asked the resolution professional (RP) to submit a summary of how Patanjali intended to fund the acquisition.

DBS is one of the 27 financial creditors to Ruchi Soya. According to documents available on the Ruchi Soya website, DBS bank-Singapore is a lender to the company and has extended it two external commercial borrowing facilities. Against this, the security interest in favour of of the financial creditor is a first charge over present and future fixed assets of the company’s manufacturing refinery units at Kandla (Gujarat), along with manufacturing units at Guna, Daloda and Gadarwara in Madhya Pradesh, and Baran (Rajasthan). The lender was expected to file the papers later on Tuesday and will present its case in detail at the next hearing.

Going by the proceedings on Tuesday, it appeared that at least three state-run banks — State Bank of India (SBI), Union Bank of India and Bank of Baroda — may assist Patanjali fund the plan. The details are expected to be made available after the next hearing. Last week, FE had reported that the lenders have agreed to a 52% haircut on the admitted claims following approval of Patanjali’s plan for Ruchi Soya.

Patanjali’s plan proposing a Rs 115-crore infusion into Ruchi Soya received a 96% approval from the CoC following a vote that concluded at 8 pm on April 30. The company is in the midst of the Corporate Insolvency Resolution Process (CIRP). One lender aware of the developments had told FE on the condition of anonymity that the offer promises Rs 4,235 crore to stakeholders.

Of this, Rs 4,053 crore will go to secured lenders against admitted claims to the tune of Rs 8,377 crore, which works out to a recovery of 48%. Meanwhile, against admitted claims of Rs 1,007 crore, unsecured financial creditors will receive Rs 40 crore as part of the proposed plan, implying a haircut of 96%. Tuesday’s proceedings further revealed that the plan has allocated Rs 15 crore for employees of the company.

SBI leads in terms of exposure, with a total debt of Rs 1,822 crore through various instruments, including term loans and working capital loans. Other creditors to Ruchi Soya include Central Bank of India, Punjab National Bank, Corporation Bank, IDBI, ICICI Bank, Bank of India, Standard Chartered Bank India, UCO Bank, Union Bank of India, Syndicate Bank, Bank of Maharashtra, Axis Bank, DBS Bank Singapore, Bank of Baroda, IDFC-Edelweiss ARC, Dena Bank, Karur Vyasa Bank and HDFC Bank, among others.

Ruchi Soya Industries was admitted into the CIRP on December 15, 2017, based on application of financial creditors Standard Chartered Bank and DBS Bank under the provisions of Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). A food and agri products company, Ruchi Soya owns several brands such as Nutrela, Sunrich, Mahakosh, Ruchi Gold and Ruchi Star. The company posted a net profit of `6.30 crore in Q3FY19 against a loss of Rs 1,956.60 crore in Q3FY18. The company reported a Rs 44.61-crore profit for nine months ended December 2018 against a loss of Rs 5,125.55 crore for nine months ended December 2017.

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