UB Engineering files liquidation plea after creditors reject recast plan

Plan was to clear dues of Rs 55 cr, pump in Rs 35 cr to run the company

Vijay Mallya-led UB Engineering has filed a petition for liquidation after a committee of creditors rejected its resolution plan. The plan, proposed by an independent director, was to clear dues worth Rs 55 crore and pump in Rs 35 crore to run the company, sources said. 

UB Engineering did not respond to Business Standard’s e-mail on the subject till the time of going to press. 

The liquidation value of the company is estimated at around Rs 106 crore. Before proposing liquidation, the company had applied for a three-month extension for presenting the resolution plan. It was one of the earliest cases filed at the National Company Law Tribunal (NCLT) under the insolvency and bankruptcy code. 

The company owes around Rs 450 crore to five banks — Axis Bank, YES bank, Corporation Bank, IDBI Bank and Laxmi Vilas Bank. The company has classified term loans, cash credits and other facilities availed of from banks as “other current liabilities”, which at the end of FY16 stood at Rs 434.9 crore, according to its annual report. UB Holdings has a 37 per cent stake in the company.

UB Engineering has been a specialist in EPC (engineering procurement and construction) projects, infrastructure, on-site fabrication of structures, installation, testing and commissioning of electrical and mechanical equipment. It also has pre-qualification credentials in electrical sub-station projects up to 400 KV.

Banks had classified the account of the company as a non-performing asset with effect from April 1, 2014. Subsequently, the company was classified as sick and referred to the Board for Industrial & Financial Reconstruction (BIFR), before it was scrapped. While the company contested the move, its turnover plunged from Rs 583 crore in FY13 to Rs 78 crore in FY16.

“The company is contesting the action initiated by the consortium of banks with appropriate authorities. Consortium banks have filed miscellaneous applications with BIFR for abatement of reference under Section 15 of SICA and some member banks have individually filed applications with appropriate authorities for recovery of their dues. The company is contesting the same by appropriate legal process,” UB Engineering said in its annual report. Now, after classification by consortium banks, it has provided for interest on outstanding and dues to the banks, the company added.

Incorporated in 1972 as Western India Enterprises by A S Wardekar, the company had come into the UB fold in 1988. After its merger with Best & Crompton in 1989, it was rechristened UB Engineering in 1993. 

Trading of the company’s stock remains suspended.