JM Financial ARC allowed to substitute BoI as petitioner in NSAIL insolvency case

A dedicated bankruptcy court has allowed JM Financial Asset Reconstruction Company to substitute the original petitioner Bank of India in a plea seeking admission of National Steel & Agro Industries Ltd (NSAIL) under the Corporate Insolvency Resolution Process (CIRP).

BSE-listed National Steel & Agro owes about Rs 1,600 crore to its lenders.

On Friday, the Mumbai bench of the National Company Law Tribunal, presided by Justice Pradeep Narhari Deshmukh, allowed the substitution of JM Financial ARC, to whom the lenders have assigned their debt as petitioner in an oral order and have posted the hearing of the matter to March 9.

Before that, Rohit Gupta, a counsel appearing for the JM Financial ARC, sought to admit the company under the CIRP and an appointment of the company's interim resolution professional (IRP).

"Seven lenders have assigned their debt to JM Financial ARC, and the corporate debtor owes over Rs 1,600 crore to its lenders. We want the tribunal to admit the company so the assets of the company can be protected," argued Gupta.

Initially, in 2014, National Steel & Agro entered into a loan agreement with the consortium led by IDBI Bank for over Rs 1,431 crore, in which the Bank of India had sanctioned Rs 125 crore.

Along with the Bank of India, other lenders, mostly state-owned banks including IDBI Bank, State Bank of India, Bank of Maharashtra, Central Bank, Union Bank and Punjab National Bank, have also assigned their debts to JM Financial ARC.

During FY2020-21, the company reported revenue of Rs 1578 crore and a loss of Rs 227 crore.

National Steel & Agro Industries Ltd has around 3,80,000 TPA installed capacity of galvanised steel as per the company's website.

On September 30, 2018, the company was declared a Non-Performing Asset (NPA) after failing to repay its dues as per the loan agreement. A lender moved against the company at NCLT in May 2019.

An email query to NSAIL did not elicit any response.

Mumbai-based NSAIL started in 1985; currently, apart from manufacturing galvanised steel, it is also a leading importer and exporter of commodities, including flat Steel, rice, wheat, soybean meal, lentils and other agro commodities.

"The company's current liabilities exceeded current assets by Rs. 1,775.72 crores as of December 31, 2021," said the company's auditors in their audit results. "As stated, these events and conditions…indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern."