Ruchi Soya to challenge IDBI Bank's wilful defaulter's tag

Company says decision was taken in the absence of the due process and without taking into consideration its present status

Edible oil major Ruchi Soya Industries is planning to challenge IDBI Bank’s decision declaring the company a willful defaulter.

IDBI Bank has declared Ruchi Soya Industries a willful defaulter vide its letter dated December 12, 2017. Ruchi Soya’s stock on the Bombay Stock Exchange (BSE) plunged by 13.56 per cent on Thursday to close at Rs 16.25 apiece after hitting a 52-week low during the day.

Ruchi Soya said in a statement to the BSE that the company is in consultation with its legal counsels, to challenge the decision (of IDBI declaring it a willful defaulter) by taking appropriate legal action that may be required in this regard.

“We are deeply disappointed with IDBI Bank declaring Ruchi Soya as a wilful defaulter especially in the absence of the due process and without taking into consideration the present status of the company. We have worked tirelessly to overcome challenges and a resolution is now visible in the form of potential fund infusion by Devonshire Capital Holdings Ltd. (Devonshire),” a company spokesperson said.

He added that the company has already filed the application under the relevant Securities and Exchange Board of India (Sebi) regulation seeking no objection on the draft Scheme of Arrangement in line with the provisions of Section 230-232 of the Companies Act, 2013. This scheme of arrangement also includes the investment proposal received from Devonshire, which provides for an arrangement with the lenders of the company to settle the outstanding dues. Ruchi Soya is in consultation with its legal counsels to challenge the aforesaid declaration by IDBI Bank, the spokesperson said.

This assumes significance as the National Company Law Tribunal (NCLT) had three days ago admitted insolvency petitions filed by the two foreign lenders — Standard Chartered Bank and DBS Bank.

With this admission, the NCLT would hear the insolvency proceedings against Ruchi Soya Industries. The company owes Rs 33 crore and Rs 150 crore of the two multinational banks (Standard Chartered Bank and DBS Bank) respectively with its total borrowing stands at Rs 5,300 crore at the end of FY 2017.

Ruchi Soya owes less than 10 per cent of its overall debt of Rs 5,300 crore as of March 31, 2017.

The company is in the midst of negotiations with other lenders. Under its restructuring plan, the company signed a binding term sheet Devonshire Capital, a global private equity fund for acquiring equity stake of up to 51 per cent in the company and equity stake of 100 per cent in the specific edible brands and distribution business of the company to be spun into a special purpose vehicle (SPV) i.e. Mrig Trading Pvt Ltd (a wholly owned subsidiary of the company) for a total consideration of Rs 4,000 crore. The Ruchi Soya board approved the scheme of arrangement on November 2, 2017.