ITC, 2 others submit resolution plans for Shakti Bhog

ITC Limited and two other companies have submitted resolution plans for Shakti Bhog foods, a north India-based wheat flour manufacturer that has defaulted on Rs 7,000 crore of bank loans and is undergoing insolvency proceedings at the National Company Law Tribunal (NCLT), as per sources in the know.
Kolkata-headquartered ITC Limited has submitted a resolution plan to acquire the company’s brands whereas the two other bidders submitted plans to take over the entire company as a going concern, the sources said.

Vidya Polymer and Shanti GD Ispat and Power Limited are the two other bidders. Bankers usually prefer offers that are for the whole company though Insolvency and Bankruptcy Code regulations have evolved to allow piecemeal sale of a bankrupt company's assets. State Bank of India has loaned Rs 4,700 crore to the company.

“We do not comment on market speculation,” a spokesperson for ITC Limited said in response to ET’s queries. Vidya Polymer and Shanti GD Ispat and Power Limited had not responded to ET’s queries until press time Friday.

The other significant lenders to the company are Union Bank of India, Punjab National Bank and Standard Chartered Bank. The bankers may have to take up to a 95% haircut because recoveries from the resolution offers are unlikely to be higher than Rs 500 crore, according to sources.

“There are barely any assets left in the company. The value is in the brands,” said an executive aware of the matter.

The bankruptcy tribunal admitted Shakti Bhog Foods for insolvency proceedings on September 22, 2022. State Bank of India’s associated banks such as State Bank of Mysore, State Bank of Patiala, State Bank of Bikaner and Jaipur, and State Bank of Travancore had advanced loans to the company prior to the amalgamation of the associate banks with the parent bank, which took place in 2017.

In all there are 13 banks and asset reconstruction companies that have loaned money to the company. The company’s former chairman and managing director Kewal Krishan Kumar is facing investigations from the Central Bureau of Investigation and the Enforcement Directorate over bank loan defaults.