Bankrupt dairy company Kwality might be just weeks away from being bought by Delhi-based snacks-maker Haldiram group, with industry sources saying the latter has emerged as the sole bidder in the ongoing corporate resolution process. People aware of the developments say Kwality’s Committee of Creditors (CoC) is set to decide on the Haldiram bid sometime later this month.
Kwality is primarily engaged in milk processing and manufacturing of dairy products, with a large market across segments like ghee, milk powders, flavoured milk, lassi and chaach. Among its assets are two milk processing units: in Softa, Haryana and Dibai, Uttar Pradesh.
According to sources, a consortium of Haldiram and Pioneer Securities have submitted a bid for the debt-ridden dairy firm, but the offer is only around 6 per cent of the company’s total dues to vendors at Rs 130 crore. Kwality had a total debt of Rs 1,969 crore, which means that if the CoC approves this plan, lenders would take an over 90 per cent haircut. “That is the only bid and the CoC will consider it this month,” said a source.
Kwality ended up in the National Company Law Tribunal (NCLT) in December 2018 after it failed to repay its dues to KKR India Financial Services. The court-appointed resolution professional is Shailendra Ajmera.
Kwality had raised Rs 300 crore from KKR India Financial Services, with an additional commitment of Rs 220 crore through various debt instruments in order to fund its expansion plans and launch a foray into the consumer segment. However, it could not meet its repayment commitments and was referred to the NCLT by KKR.
In Kwality’s annual report for FY 2017-18, managing director Sanjay Dhingra said that a lack of working capital had been affecting Kwality’s performance. The company then went on to incur a net loss of Rs 3,216 crore the next fiscal (FY19) after a profit of Rs 92 crore in FY18.