Singaporean lender DBS Bank has contested the bankruptcy-resolution plan of Rs 4,350 crore offered by Patanjali Ayurved to buy debt-laden Ruchi Soya Industries Ltd, citing unfair treatment in terms of claims.
On Tuesday and Wednesday, the foreign bank told the Mumbai bench of the National Company Law Tribunal (NCLT) that it has not received fair value on assets despite the status of a first charge holder as a secured financial creditor.
Reserving the order after hearing DBS, the two-member bench asked the resolution professional (RP) to submit a summary of how Patanjali intended to fund the acquisition. The bench has also asked DBS to file its reservations in written over the next two days, a person close to the development told VCCircle, asking not to be named.
DBS is one of the 27 financial creditors to Ruchi Soya, which has total outstanding dues of about Rs 12,000 crore, with around Rs 9,385 crore owed to its financial creditors. State Bank of India has the largest exposure, with dues of Rs 1,816 crore.
"In the resolution plan, DBS claims it is getting about Rs 117 crore, which is much less than about Rs 200 crore that it may get if the company goes for liquidation," the person mentioned above said.
The order will be pronounced by the bench and uploaded soon, likely before 10 May as vacation for NCLT starts from 11-25 May, the person added.
Last week, lenders to Ruchi Soya approved a revised offer by Patanjali, the consumer goods company backed by yoga guru Baba Ramdev, to take over the stressed edible oils maker.
The revised proposal of Rs 4,350 crore with Rs 115 crore upfront cash was nearly Rs 200 crore more than it had offered earlier. It pipped Adani Wilmar Ltd’s bid of Rs 4,100 crore. With a 96% approval on 30 April, lenders agreed to a 52% haircut on the admitted claims.
The resolution plan entails Rs 4,053 crore to secured lenders, which works out to a recovery of around 57%. 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.
By documents on the Ruchi Soya website, DBS has extended two external commercial borrowing facilities, against which the security interest in favour of the financial creditor is the 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).
Meanwhile, giving a detailed plan of its resolution for the target company, Patanjali informed the tribunal that of the Rs 4,350 crore offer, it will borrow Rs 3,233 crore from banks and Rs 1,185 crore will come from internal accruals and other sources.
Patanjali also said it has no plans to take the target company private by delisting. Instead, it said initially it will own 98% of equity and 1.7% will be held by the public. But to meet norms of 25% public holding, within 18 days it will divest a little over 23% to the public. As of now, the public holds 66% in Ruchi Soya, according to a Press Trust of India report.
On 1 May, the NCLT had given Patanjali time till 7 May to file a detailed resolution plan for Ruchi Soya.
In December 2017, Ruchi Soya was referred to the NCLT following petitions from financial creditors Standard Chartered Bank and DBS. The NCLT appointed a resolution professional under the Insolvency and Bankruptcy Code.
Ruchi Soya has several manufacturing plants and it sells food products and edible oils under brands including Nutrela, Mahakosh, Sunrich, Ruchi Star and Ruchi Gold.