Bombay HC orders winding up of textile major S Kumars

08 Jul '16

5 min read

The subsequent economic slowdown and cut down on luxury spending by consumers led to a further slide in fortunes of the company that reported a net loss of Rs 209 crore on a revenue of Rs 544 crore in the June quarter of 2014.

Then on, the company began facing winding up petitions, the first being admitted in August 2014. The number of petitions just kept growing, and at the time of passing of the order on July 1, there were 10 such petitions tagged together.

The winding up order was passed on the basis of the petition filed by ICICI Bank. S Kumars owed the bank more than Rs 95 crore, and both parties had agreed to settle the case for Rs 86 crore. The company sought time to make pay back in instalments of Rs 75 lakh each, but could pay only two instalments.

Between that order and the final winding up order, S Kumars kept seeking fresh loans, much to the ire of the shareholders, who called for Nitin Kasliwal's removal as chairman. The dissenters, including Mumbai-based stock broker Bharat Jayantilal Patel, said Kasliwal had "grossly mismanaged" the company, and the mounting debt had caused the company to default on its interest commitments.

The S Kumars management, on its part, reportedly informed the lenders and the HC that it had entered into a "term sheet" with a company called Green Capital Management, having its registered office in the Republic of Panama, to restructure its debt worth Rs 2,000 crore.

However, the lenders raised concerns about credentials of the Panama company. Their fears were proved right when nobody from that company replied to the HC notice, forcing S Kumars to admit that the proposal "wasn't working out".

The company then sought more time to come up with a fresh scheme, to which the lenders agreed. SKNL then filed a reference before the Board for Industrial and Financial Reconstruction (BIFR) and used it as a ground in the high court to get the hearing of winding up petitions adjourned till the BIFR took a final call.

Agreeing with the lenders' opposition to such a move, Justice BP Colabawalla ruled that S Kumars' interpretation of the provisions cited for seeking sine die postponement of the petitions was wrong. He passed the winding up order saying the company seemed unable to pay its debts.

The S Kumars Group was founded in 1948 by brothers Abhaykumar Kasliwal and Shambhukumar Kasliwal. It became a private limited company in 1991 and went public in 1994. Nitin Kasliwal is Shambhukumar's son. (SH)

Fibre2Fashion News Desk – India

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