Insolvency: India Gate basmati rice maker KRBL group eyes REI Agro

REI Agro, a firm that claims to have a 22 per cent share in the world’s basmati rice market, has gone in for liquidation after the National Company Law Tribunal (NCLT) ordered it to do so. Sources in the know of the matter said the makers of India Gate basmati rice, the KRBL group, have shown interest in REI Agro.

REI Agro, which sells Raindrops basmati rice, has a reserved price of Rs 2 billion. The official liquidator will hold an e-auction for the company. While the company has many assets, only those not under litigation or that which have not been attached by the enforcement directorate have been taken into account. 

The promoters of KRBL, which makes the popular India Gate basmati rice, raised Rs 150 million through an initial public offering (IPO) in 1995. Twenty-two years later, the country’s most profitable basmati company has a market capitalisation of nearly Rs 102.4 billion. The family owning the firm happens to the first billionaires in the rice business.

The notification, late last year, stating that REI Agro will go in for liquidation had said the board and key managers have lost their powers and all employees have been discharged. REI Agro’s insolvency case was admitted by the Kolkata Bench of the NCLT in March 2017.

The NCLT can order liquidation if a firm fails to bring to the table a resolution plan within six months of admission of the case. This can be extended by another three months.

The company ended 2015-16 with losses of Rs 10.8 billion. REI Agro’s standalone turnover for that year was Rs 5.2 billion. According to its annual report of 2015-16, it owed 22 banks an amount of Rs 47.4 billion. It has also not paid interest on loans availed from banks and financial institutions. 

The company’s troubles started when it began facing a liquidity crunch due to a shortage of working capital. Its processing units were running on marginal capacity and production was suspended in many plants during the year under review.

The annual report also showed that REI Agro attempted to restructure itself. However, banks rejected the plan proposed by the company. It also said several banks had initiated action against the company under the the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act.

In 2015, REI Agro became a sick company after it filed an application with the then Board of Industrial and Financial Restructuring.