Lenders to Kamlapur Sugar and Industries Ltd have put the assets of the sugar mill on sale following failure of its owner Pawan Ruia to honour the loans, sources told DNA.
The Kamlapur mill in Uttar Pradesh has a capacity of crushing 4,000 tonne of sugar cane a day and also a 6 MW power generating plant but has remained shut for some time.
A meeting of the secured creditors of the company, which is under liquidation was convened on December 3 organised by the Pradeshiya Industrial and Investment Corporation of Uttar Pradesh (PIICUP) where the secured creditors present agreed that the land, plant and machinery should not be sold at less than Rs36.48 crore.
IFCI, however, demanded that the assets should not be sold for less than Rs40 crore.
Stressed Assets Stabilisation Fund (SASF) had written a letter to PIICUP indicating that the factory, land and the related assets should not be sold at less than the reserve price. While no reserve price was indicated in an earlier advertisement for sale of the assets, a valuation conducted by SASF a year back revealed that the fair market value of the assets would be in excess of Rs47 crore and that the distress sale value would be around Rs42 crore.
Following the advertisements issued in July, Aloke Towers Pvt Ltd offered a bid of Rs30 crore.
In view of the stand of the secured creditors and the valuation report, the sale of the assets weren’t permitted, officials of financial institutions said.
Pawan Ruia had earlier initiated talks with bankers to settle dues of about Rs60-70 crore owed by Kamlapur Sugar but with negotiations failing, one of the lender, Dena Bank filed a winding-up case to recover its dues.
Kamlapur was one of the earliest ventures of Kolkata-based chartered accountant Pawan Ruia who came under the spotlight in 2005 with acquisition of Late Manu Chhabria’s group companies, Dunlop India and Falcon Tyres.
But even as he subsequently faltered to keep Dunlop, a sick company, running, Ruia’s ambition soared and he started picking up several small sized European tyre and rubber companies post the global economic meltdown of 2008.
But with financial institutions refusing to lend him money, he messed up the recovery of these foreign acquisitions and eventually lost control over most of them.