NCLT wants Assam Co. bidding norms revised
A suitor for Assam Co. India Ltd—the country’s oldest surviving and perhaps most prized tea company (in terms of assets), now going through insolvency resolution—has successfully petitioned the National Company Law Tribunal (NCLT) to dilute eligibility conditions for bids.
Mumbai-based M K Shah Exports Ltd, a leading exporter of tea, had moved the Guwahati bench of the tribunal, arguing that the condition that bidders must have a minimum tangible net worth of ₹400 crore could potentially lead to sub-optimal resolution of insolvency.
M K Shah cited the financials of leading tea producers such as Warren Tea Ltd, James Warren Tea Ltd, Goodricke Group Ltd and Jay Shree Tea & Industries Ltd, and argued that the tangible net worth of each of these companies was less than ₹300 crore. M K Shah itself had a tangible net worth of ₹200 crore, according to its filings with the tribunal.
“This means that none of the major players in the tea industry in India will be able to participate in the insolvency resolution process”, the tribunal observed in its order, while declaring that the minimum tangible net worth requirement of ₹400 crore was “arbitrary and illegal”.
The April 26 NCLT order directed the resolution professional and the company’s lenders to reconsider the qualifying conditions “in the interest of fair play”.
Resolution professional T Kannan declined to comment, saying the verdict was being reviewed by law firm Khaitan & Co. If he chooses to challenge the verdict, he could take the line that at least five top tea companies have already submitted expressions of interest (EoIs). The last date for submitting EoIs was 26 April.
Plantation companies that have submitted EoIs are Luxmi Tea Co. Ltd, Warren Tea, M K Shah, Dhunseri Tea & Industries Ltd and the Apeejay Surrendra Group.