NCLT appoints Interim Resolution Professional to manage Assam Company

Appointment of an IRP for India's oldest tea plantation & oil exploration firm comes after a petition by Srei, which claimed Assam Company owed it over Rs 595.60 cr as on August 11, 2017

The Guwahati Bench of the National Company Law Tribunal (NCLT) has appointed Vinod Kumar Kothari as an interim resolution professional (IRP) to manage the 178-year-old Assam Company India Ltd, India’s oldest tea plantation & oil exploration company. According to industry players, this is the first such case in the plantation sector, but there could be more in the time to come.

Assam Company, with its assets comprising 14 tea estates, also has participating interests in oil & natural gas exploration in Assam. It employs 16,500 people, directly or indirectly.

While company officials were not immediately available for comments, NCLT documents and the company's annual report show debt (including principal amount), interest due but not paid, and interest accrued but no due, working out to around Rs 736.25 crore.

In 2016-17, the company's loss had increased to Rs 70.79 crore from Rs 53.31 crore a year earlier. For the quarter ended June 30, 2017, the company reported a loss of Rs 21.38 crore, against Rs 22.47 crore a year earlier. In the plantation segment, where Assam Company primarily operates, it reported a loss of Rs 13.55 crore, against Rs 13.52 crore in the year-ago period. In the oil & gas segment, the company reported a loss of Rs 31.17 lakh, versus Rs 1.60 crore a year earlier.

The appointment of an IRP comes after a petition filed by Srei Infrastructure, a creditor that extended a term loan of Rs 100 crore with Assam Company as one of the guarantors.

Srei claimed that the company, as on August 11, 2017, owed it a little over Rs 595.60 crore. Assam Company, on the other hand, argued that Srei had claimed different amounts in different documents.

Now, the IRP has called for an expression of interest for valuation of assets and properties of Assam Company. IRP Kothari, in a communication to the company’s employees, said the initiation of insolvency proceedings was merely a recognition that there was a need to take some remedial action for resolving the present situation. The remedial action is based on a resolution plan to be presented and accepted by the creditors. It would thereafter be ordered by NCLT.

At the preliminary stage, there is no reason for any concern about the company. In fact, one of the primary obligations of the IRP/RP during the resolution was to maintain “the going concern nature” of the company, he said.

Bidyananda Barkakoty, advisor to North Eastern Tea Association, said an uncertainty over regulations would lead to more plantation companies going bankrupt, given the current prices of tea and increasing production cost, especially in the Northeast. Most of the companies are making losses, and only a handful are reporting break-even, he added.