Ruchi Soya Industries Ltd, an edible oil maker, was served an insolvency and bankruptcy notice, the company told stock exchanges on Monday.
The petition, asking for repayment of Rs9.63 crore, was filed by an unsecured lender to the company at the National Company Law Tribunal (NCLT) and Ruchi Soya has disputed it.
“The company is taking appropriate legal recourse in the matter,” it said in a statement to the stock exchanges.
Ruchi Soya has been looking to pare its debt, which stood at Rs4,513.79 crore at the end of fiscal 2016. At that time, Ruchi Soya’s debt-to-equity ratio stood at 10.19. The firm has also been unable to generate cash from operations to repay this debt. In the three months ended December, it posted a loss of Rs216.83 crore on quarterly revenues of Rs5,031.98 crore.
An email sent to Ruchi Soya on Monday afternoon remained unanswered.
Last week, Mint reported the company had signed a three-year pact with Baba Ramdev’s Patanjali Ayurved to refine and package soya, mustard and sunflower oil for the Haridwar-based consumer packaged goods company.
This deal will help Ruchi Soya put unutilized capacity to use and generate income that can potentially help cut debt.
Last week, the Bombay high court dismissed a winding up petition filed by IDBI Bank, the leader of a consortium of Ruchi Soya’s lenders.
The petition demanded that Ruchi Soya compulsorily liquidate some assets to pay up an outstanding debt of Rs200 crore.
“A large part of their net worth was also eroded when castor seed prices fell in January last year and the company lost around Rs800 crore in open positions,” said Naresh Golani, group head at CARE Ratings. On 25 May, Mint had reported that the regulator had barred the company from trading on the securities market for “alleged fraudulent and manipulative trading in castor seeds at the NCDEX”.
After being debarred, Ruchi Soya was unable to liquidate its positions in the castor seeds market, said Golani.
“Ruchi Soya has also been posting losses because its interest income is high, as is its material cost at 91%”, he said. “In the nine-month period ended December 2016, it has seen a decline in sales from oils (its largest business) and from seed extraction, with reduced margins in the seed crushing business.”
In 2016, CARE Ratings downgraded Ruchi Soya’s rating for bank facilities thrice, from Care BBB+ to a current D.
