The cancellation of a contract in 2011 to supply flavored milk to 1,500 schools in Mumbai and frequent droughts in Maharashtra have brought a 53-year-old dairy cooperative, Warana Dairy and Agro Industries Ltd, to the brink of bankruptcy, according to documents filed by the company in the National Company Law Tribunal (NCLT).
The Punjab National Bank (International) Ltd took Warana Dairy, which supplies milk and dairy products to Maharashtra and exports them to a few countries, from NCLT due to a default of Rs 40 crore which was due to be repaid in March 2020.
On September 16, the NCLT issued an order allowing PNB International’s request to initiate insolvency proceedings against Warana Dairy. The court also appointed Rakesh Bothra as an Interim Resolution Professional (IRP) in this case. The case will now be heard by the NCLT on November 11.
According to advocacy from PNB International, Warana defaulted on a $ 5 million loan to the dairy company in 2013. The bank said that as early as 2015, Warana Diary’s account became a non-performing asset (NPA). . In October 2018, the bank recalled its loan to Warana due to the non-payment of the outstanding loan. Subsequently, in January 2019, the dairy company approached PNB International with a one-time settlement offer of Rs 10 crore, which the bank rejected.
Now the journalism firm has claimed that the bank sanctioned and disbursed only Rs 27 crore in 2013 and the company has already repaid Rs 10.39 crore. The company said an “erratic cash flow,” “drought” in Maharashtra and “changes” in the levels of milk and dairy products by the state government have affected its milk production, leading to a crisis. financial for the company.
The company also said it “was facing a serious cash shortage due to the change in government policy and the cancellation of the contract to supply 2 lakhs of milk to 1,500 schools in Mumbai.”
Now the NCLT has ordered Warana not to dispose of or sell any of its assets. He also stated that the provision of essential goods or services to Warana Dairy will not be terminated, suspended or interrupted during the resolution process initiated under the Insolvency and Bankruptcy Code.