India’s largest loose tea producer McLeod Russel goes bankrupt
The company operates 31 tea gardens in Assam, 2 in Alipurduar and also has gardens in Africa, Vietnam
India’s largest producer of loose tea, McLeod Russel India Ltd (MRIL), was admitted into insolvency proceedings on Friday for defaulting on a loan of 100 crore rupees.
The company, promoted by the Khaitan family of Calcutta, operates 31 tea gardens in Assam and two gardens in Alipurduar, Bengal. It also has gardens in Africa and Vietnam. The company employs more than 73,000 people in the tea plantations and produces approximately 73 million kg of tea each year.
A bench at the National Company Law Court of New Delhi admitted the company to corporate insolvency resolution proceedings under the 2016 Insolvency and Bankruptcy Code and appointed Kanchan Dutta as an interim resolution professional.
Although several banks have filed complaints against MRIL for default, the plaintiff in this case was Techno Electric and Engineering Co Ltd, which loaned Rs 100 crore at 14% annual interest on September 28, 2018.
The full amount was to be fully repaid with interest no later than March 31, 2019. However, McLeod did not repay the amount on that date and later as well. The court noted in its order that MRIL had not contested the amount of the default or the existence of the amount of the loan.
In a statement, MRIL said it would operate like a normal business on a “going concern” principle and that the interests of all stakeholders would be protected.
“The business of the business and all obligations will continue under the direction of the IRP. The undersigned and Company Secretary Alok Kumar Samant will continue to be key management personnel. Azam Monem will continue to guide the operations of the company, ”Pradip Bhai, chief financial officer of MRIL, said in a statement. Monem is a director on the board of directors of the company that handles tea operations.
Contacted, Aditya Khaitan, chairman of the company, declined to comment. Sources said the developers would explore the options before them over the weekend, including appealing to the appeals court.
MRIL is in debt of around Rs 2,000 crore as it borrowed heavily to support a McNally Bharat Engineering Co Ltd. group company. .
McLeod initially sold several gardens in Assam, Bengal and Africa to honor loan commitments, but the enormity of the challenge quickly overtook the resource. The Khaitans only own around 10.07% of the company after the lenders invoked the shares pledged with them for defaulting on the loan.
Even though the majority of financial creditors would be inclined to restructure the business outside of insolvency and have mandated SBI Caps to prepare a roadmap, Techno spared no efforts to pursue the case at the NCLT and ultimately succeeded. .