The National Company Law Tribunal, Hyderabad, has passed an order for liquidation of ailing Nizam Deccan Sugar Factory Ltd, after efforts to find a suitor to revive it under the Insolvency and Banking Code (IBC) failed.
K Anaantha Padmanabha Swamy, Member Judicial, NCLT Hyderabad, in its order passed recently, has approved a petition moved by debtors of the sugar factory for liquidation.
Established at Bodhan in Telangana in 1938 during the Nizam era, the sugar factory is one of the biggest factories with units at Bodhan, Metpally and Mambojipally. The factory was a hub of economic activities in the past.
While the Telangana government holds 49 per cent equity stake, the erstwhile unified Andhra Pradesh State had divested 51 per cent stake to a private company as a part of the restructuring process of State-owned enterprises.
The Telangana Rastriya Samithi leadership headed by K Chandrasekhar Rao, during 2014 election campaign, had assured to take over the ailing Nizam Sugars and after the government formation it had issued an order to continue the factory under the cooperative sector.
With the sugar units getting closed, the private management knocked at NCLT for liquidation of the company.
Thereafter in 2017, the Corporate Insolvency Resolution Process was initiated, inviting creditors to submit their claims.
The Committee of Creditors (Andhra Bank, Syndicate Bank and Indian Overseas Bank), held 11 meetings, which included seeking Expression of Interest as per the provisions of the IBC.
It had received interest from Phoenix ARC private Limited, Mumbai, and Hindustan infrastructure Projects & Engineering Private Limited, Bengaluru, but there wasn’t much progress thereafter.
The Resolution Professional approached the Industries and Commerce Department of Telangana and requested the Government to consider the Government Order issued in 2015, wherein the Government had decided to annul the joint venture agreement of NDSL and private firm DPML and manage the functioning of the factory in the cooperative sector.
However, as on July 2018, for the Adjudicating Authority there was no Resolution Plan from the Telangana government.
The Counsel representing Telangana had said that it requires 12 weeks to prepare a comprehensive plan.
However, as more than the 270 days elapsed without any concrete plan, the NCLT took up the petition and passed orders for its liquidation.
The Adjudicating Authority appointed R Ramakrishna Gupta, who had served as the Insolvency Professional, as the liquidator and directed follow up action.