Bank of India has initiated insolvency proceedings against Kolkata-based commercial equipment manufacturer TIL (Tractors India) to recover its dues as previous recovery efforts have failed, people familiar with the process said.
Five banks, including BoI, have total receivables of ₹600 crore from the company that has been classified as a non-performing asset by banks. “The case has been filed in the NCLT pending admission. There was no other recourse since the company is bleeding and no resolution is in sight,” said a person aware of the process.
The promoter had proposed restructuring of loans with a repayment tenure stretching 10 years, which banks were not keen on. Hence, the lenders have opted for a court-monitored bankruptcy process.
TIL is a manufacturer of cranes, trucks and container handlers, and the company was incorporated before independence.
Its results show that it has been making losses for more than a year. At the end of September 2022, the company reported a loss of ₹21 crore mainly as revenues dwindled. Total income fell to just ₹4 crore at the end of September 2022 from ₹17 crore a year ago, indicating the challenges it faces. In their report accompanying the results, auditors Singhi & Co noted that the company’s net worth is negative and its current liabilities exceed its current assets as of September 30 2022.
“The company is contemplating strategic investment by the issue of preferential shares to Indocrest Defence Solutions Pvt Ltd pursuant to the provisions of Regulation 164A of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, subject to the approval of the shareholders…. The board of directors … has passed a resolution to this effect at its meeting held on 26th November 2022 and has also informed the stock exchanges,” the auditors said.
Lenders are also open to finding a buyer outside the insolvency process and settling the account through a one-time arrangement given the delays in the bankruptcy court, a second person aware of the process said.
TIL has objected to the NCLT plea by BoI. The auditors said that though its financial situation has cast doubts on the company’s ability to continue as a going concern, the management is confident of mitigating the uncertainties due to the proposed strategic investment and sales orders in hand.
Non-bank lenders Tata Capital Financial Services and Aditya Birla Finance have also initiated SARFAESI proceedings for recovery of dues.
