NCLT relief to help Bajaj Hindusthan focus on expansion, growth plans

Bajaj Hindusthan Sugar Ltd, one of the country's leading sugar companies, will now focus its energies on expansion projects and future investments following the dismissal of a petition in the National Company Law Tribunal (NCLT) yesterday.

The petition was dismissed under Section 7 of the Insolvency and Bankruptcy Code (IBC) after considerations of submissions made by the State Bank of India (SBI), the largest lender, for withdrawal of the petition, the company informed the stock exchanges today.

Sources said the plans, which were on hold due to the NCLT proceedings, will now be restarted with renewed vigour.

"We take this opportunity to thank the lenders and each stakeholder for believing in us and how we conduct our business. We are mindful of our legacy of trust, transparency, and fair play. We truly value our relationships with our stakeholders, especially lenders. We have a track record of honouring our commitment to them for close to 100 years now," said Neeraj Jha, Bajaj Group spokesperson, group president, and chief communications officer, in a statement.

He said this development would allow Bajaj Hindusthan Sugar Ltd to focus fully on this business, which the company believes has an exciting future.

"We hope this will be a win-win for all our stakeholders, which includes our lenders, governments and their agencies, our employees, shareholders, and investors, and most importantly, lakhs of sugarcane farmers who we see as an extended part of our family and who have stood by us through thick and thin," Jha added.

The petition for withdrawal in the NCLT was moved by SBI, as the outstanding amount had been paid by the corporate debtor, which in this case is Bajaj Hindusthan Sugar.

The company owed banks around Rs 4,771 crore and had availed itself of two debt-restructuring schemes, leading to steep haircuts taken by the lenders.

The maximum amount of dues was from SBI, somewhere around Rs 1,192 crore.

The lenders had declared Bajaj Hindusthan Sugar as a non-performing asset (NPA) before taking it to the NCLT, thus plunging the whole sugar sector into turmoil, as Bajaj is one of the largest sugar companies in the country.

Bajaj Hindusthan Sugar operates more than 14 sugar factories, largely in Uttar Pradesh, making it one of the biggest players in the state.

Industry sources said the fate of almost 600,000 sugarcane farmers in Uttar Pradesh directly depended on the health of sugar factories owned by Bajaj.

"The recent decision of the National Company Law Tribunal (NCLT) to dismiss the petition against Bajaj Hindusthan Sugar, following the State Bank of India's (SBI) request for withdrawal, signifies the conclusion of a prolonged tussle between the company and its financial creditors. This development underscores the company's commitment to settling its obligations and sets a precedent that financial creditors may face challenges in withdrawing petitions post-settlement. Such a move is likely to spur companies to take their financial obligations more seriously, resolving issues before they escalate to the NCLT. Prior to this, many companies might have been biding their time, waiting for a strategic moment to settle their dues. With this change, the landscape for corporate financial settlements is poised for a positive transformation," said Sonam Chandwani, managing partner at KS Legal & Associates.