DBS, Standard Chartered File Insolvency Cases Against Ruchi Soya
Ruchi Soya faces insolvency action from two foreign lenders.
Ruchi Soya Industries Ltd. on Friday said that two international lenders have filed independent insolvency cases against the edible oil maker at the Mumbai bench of the National Company Law Tribunal.
In two notifications, the fast-moving consumer goods company said that DBS Bank India and Standard Chartered Bank had approached the NCLT to initiate the corporate insolvency resolution programme and that it had received notices in each of them.
According to information available in the company’s annual report for the financial year ended March, Ruchi Soya’s total debt stood at Rs 5,329.37 crore, including Rs 4,700 crore in the form of secured loans. The consortium of lenders includes 16 banks like State Bank of India, ICICI Bank, Axis Bank, IDBI Bank.
The company suffered from acute working capital problems and a severe increase in finance cost due to weak economic outlook, it said in its annual report.
In the report, Ruchi Soya also said that the lenders to the company were discussing invocation of the strategic debt restructuring mechanism, but it could not be done since the lenders could not get majority approval. Presently, a steering committee of major lenders was looking at coming up with long-term sustainable solutions.
According to a senior official at a large public sector bank, Ruchi Soya was part of the second list of stressed assets sent by the Reserve Bank of India to bankers last month. The cases which formed part of the second stressed list would have to be resolved through available mechanisms by December 13, failing which lenders would be forced to approach the NCLT for insolvency.
In June, the regulator had sent its first list of 12 large stressed assets, where they were asked to start action under the insolvency and bankruptcy code on an immediate basis. These 12 cases constituted 25 percent of the banking sector’s gross non-performing assets.
Since the central bank’s letter to lenders in June, 11 out of the 12 cases have been admitted under the insolvency process and are currently being dealt with by resolution professionals.
Era Infra Engineering Ltd has currently been sent to a three-member special bench, constituted to find out the maintainability of the insolvency petition, even as winding-up petitions are pending against the company. The hearing in this matter is due on September 21.