In a bid to revive the struggling wheat flour manufacturer Shakti Bhog, ITC Limited and Vidya Polymer, along with Shanti GD Ispat & Power Limited, have submitted resolution plans to the National Company Law Tribunal (NCLT). Shakti Bhog, based in North India, has defaulted on bank loans amounting to Rs 7,000 crore, leading to insolvency proceedings against the company.
According to the Economic Times (ET) report, ITC Limited aims to acquire the brands associated with Shakti Bhog, while Vidya Polymer and Shanti GD Ispat & Power Limited are bidding to take over the entire company. This development comes as a potential lifeline for Shakti Bhog, as the resolution plans offer a chance for its revival and debt repayment.
The major lenders to Shakti Bhog, namely Union Bank of India, Punjab National Bank, and Standard Chartered Bank, may face significant losses as the recovery from the resolution offers is expected to be limited. The ET report suggests that the banks may have to take a haircut of up to 90 percent, with the recoveries unlikely to exceed Rs 500 crore.
An executive quoted in the report emphasizes that the remaining assets in the company are minimal, leaving the brand value as the primary asset of interest. Shakti Bhog, which entered insolvency proceedings in September 2022, had obtained loans from various banks, including State Bank of Mysore, State Bank of Patiala, State Bank of Bikaner and Jaipur, and State Bank of Travancore. Following the amalgamation of these associate banks with the State Bank of India (SBI) in 2017, SBI’s total loan exposure to Shakti Bhog stands at Rs 4,700 crore.
The situation is further complicated by ongoing investigations against Kewal Krishan Kumar, the former chairman and managing director of Shakti Bhog. Both the Central Bureau of Investigation and the Enforcement Directorate are probing Kumar for his alleged involvement in the bank loan defaults.
Shakti Bhog, once a prominent player in the wheat flour industry, has struggled to cope with its mounting debt burden, leading to the insolvency proceedings and subsequent attempts at resolution. The submission of multiple resolution plans by ITC Limited, Vidya Polymer, and Shanti GD Ispat & Power Limited signifies a ray of hope for Shakti Bhog’s future, as stakeholders work towards finding a viable solution and securing the company’s revival.
The NCLT will now evaluate the resolution plans and determine the most suitable path forward for Shakti Bhog, considering the interests of its lenders, employees, and other stakeholders. The outcome of this process will shape the future trajectory of the once-thriving wheat flour manufacturer and provide insight into the recovery prospects for the defaulted loans.
