PGP group regains control of Dharani Sugars

CHENNAI: It is ‘sweet’ news for Dharani Sugars & Chemicals Limited (DSCL) after the NCLT, Chennai Bench approved the settlement proposal under Section 12A of IBC rules through National Asset Reconstruction Corporation (NARCL).

The company, spearheaded by industry veteran Palani G Periasamy, was admitted into Corporate Insolvency Resolution Process by the NCLT, Chennai Bench, in July 2021 after suffering losses during the 2016–19 period owing to consecutive monsoon failure and other reasons (unpaid loans of the consortium of lenders), a release said.

The promoters have been taking continuous efforts to revive the company by making payment to the banks and exit this process. They had also paid 35 per cent of the agreed amount to the consortium lenders as part payment and submitted a proposal under section 12A of the IBC Rules to the committee of creditors. As the promoters were unable to arrange the balance funds on time, the NCLT Chennai Bench issued orders for liquidation of the company on March 18, 2023.

The liquidation orders were challenged in the Supreme Court, which granted a stay of the above orders on August 7, 2023. Meanwhile, NARCL (under Ministry of Finance, Govt of India) had taken over the loans from the consortium lenders (10 banks) except the loans from IREDA and Sugar Development fund (SDF).

The 12A proposal was approved by the COC consisting of NARCL, IREDA and SDF with a voting of 92.6 per cent and the lead bank submitted the proposal to withdraw the CIRP process through the Resolution Professional. The 12A proposal was approved by the NCLT Chennai, Bench on the May 9, 2024 and as a result, the DSCL exited the CIRP process, restoring the powers of the Board of Directors with immediate effect. The original promoters have taken over the control and management of the affairs of the company from now.

It is learnt that the operations of the company will be revived within three months after completing overhaul of the equipment and process machinery, which have not been in use over few years.

This development will help revive the three sugar factories located in Vasudevanallur (Tirunelveli), Polur (Tiruvannamalai) and Kallakurichi (Sankarapuram).

Periasamy, chairman, Dharani Sugars & Chemicals (A unit of PGP Group) said, “NCLT order allowing our proposal for DSCL affirms our commitment and consistent efforts for revival of sugar and allied businesses.” Noting that Dharani Sugars had successfully come out of the corporate insolvency resolution process, he said “the NCLT order has paved the way for PGP group, the original promoters for regaining control of DSC.” “Dharani Sugars is hopeful of re-starting the operations at its three factories in TN and working closely with over 35,000 cane growers for betterment of their lives and continuing its contribution to the sugar economy of TN,” he said.

Further, Periasamy also said growth prospects looked promising for Indian sugar sector with demand uptick for sugar and the necessary policy thrusts provided by the Centre and States for producing ethanol as an alternate fuel and power from bagasse.