State Bank of India (SBI) is planning to invoke the personal guarantees of its debtor firm Bajaj Hindusthan Sugar Ltd’s (BHSL) promoters after the company was referred to the National Company Law Tribunal (NCLT) for debt resolution, according to a media report. The corporate insolvency resolution process has not yet started as the NCLT’s Allahabad Bench is yet to admit SBI-led consortium’s petition.
Bajaj Hindusthan Sugar owes Rs 4,771 crore to Indian banks. The company has already gone for two debt restructuring schemes, which led to significant haircuts for banks.
“We are taking steps to invoke the personal guarantees of promoters in accordance with the Supreme Court’s directions in this regard in May this year," according to the Business Standard report which quoted a banker as saying. It said a BHSL spokesperson declined to comment.
Earlier this month, the country’s largest lender SBI filed an insolvency petition against the country’s largest sugar firm Bajaj Hindusthan Sugar Ltd. SBI as a financial creditor has filed the plea before the Allahabad bench of the National Company Law Tribunal (NCLT). The petition has been filed under Section 7 of Insolvency and Bankruptcy Code 2016.
In a regulatory filing, Bajaj Hindusthan has said “we understand that State Bank of India, financial creditor through its advocate has initiated Corporate Insolvency Resolution Process of Bajaj Hindusthan Sugar Ltd".
Bajaj Hindusthan Sugar had posted a consolidated net loss of Rs 267.54 crore and a turnover of Rs 5,607 crore in the last fiscal year. For the quarter ended June of this fiscal year, the company reported that its net loss stood at Rs 45 crore and total income at Rs 1,538 crore.
During the June 2022 quarter, due to delayed payment of loan instalment and coupon rate interest on optionally convertible debentures, lenders have classified the company’s account as non-performing assets (NPA) as per the RBI regulations on loan classification.
The lenders of the company have signed an ICA (Inter Creditors Agreement) on January 28, 2022 for resolution of the company’s accounts, the company had said in the notes of accounts of financial statement for the first quarter.
The debt restructuring as per RBI’s S4A scheme has improved the company’s liquidity position, it said.
“However, keeping in view the status of outstanding cane dues and funds for servicing debt obligations, the company is further discussing with the lenders a debt resolution plan to have a lasting solution to improve its liquidity," Bajaj Hindusthan had said.
The resolution plan envisages reduction of its overall debt, realignment of its capital structure, payment of cane dues of farmers, increasing cane availability and supply, etc.
“The company is also exploring/evaluating various options for corporate restructuring to streamline the business and enhance the company’s value," Bajaj Hindusthan said.
Bajaj Hindusthan Sugar Ltd is India’s leading sugar and ethanol manufacturing company. Part of the Bajaj Group (Kushagra), it is headquartered in Mumbai, Maharashtra.
(With inputs from agencies)