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A mix of strategic and financial investors have submitted expressions of interest to buy out loss-making Kwality Dairy, which is facing insolvency proceedings, two officials aware of the developments said.
The bidders include TPG Capital, Aion affiliate Arcion Revitalisation, IndiaRF — a joint venture between Piramal Enterprises and Bain Capital Credit — Haldiram Snacks and JK Group’s LVP Foods.
Private equity firm KKR, which invested Rs 520 crore in 2016 to finance Kwality Dairy’s plans to enter the consumer segment, started bankruptcy proceedings against the struggling dairy maker in October last year. KKR filed a plea in the National Company Law Tribunal under the Insolvency and Bankruptcy Code.
The bids have been submitted to Shailendra Ajmera of EY, who is the resolution professional for Kwality Dairy. The last date for the bids was March 31.
“The resolution plan has to be submitted by May 15 and the total financial creditor claim submitted is Rs 2,100 crore,” one official said.
Ajmera could not be reached for comment.
A spokesperson for IndiaRF said in response to an email query that the company does not comment on market speculation. Spokespersons for Arcion and TPG declined to comment. An email query sent to LVP Foods remained unanswered till press time. Haldiram Snacks could not be reached for comment.
Kwality Dairy posted a loss of Rs 1,500 crore in the quarter ended December.
After selling its ice-cream brand to consumer goods major Hindustan Unilever in 1994, Kwality has operated as a business-to-business supplier, while in the consumer space, it produces milk, ghee, butter, milk powder, curd, yogurt and cheese under the brand Dairy Best.
The ailing company’s sales declined to Rs 1,976 crore in the nine months ended December from Rs 5,016 crore a year earlier, while it posted a net loss of Rs 2,450 crore against a profit of Rs 69.82 crore.
“Inability to meet financial obligations, including repayment of various loans and unpaid interest, and promoters not being able to bring in fresh capital are reasons why Kwality’s market value and financial performance have declined considerably over the past year,” the official said.
According to information on its website, Kwality Dairy, which was set up in 1992, can process about 3 million litres of milk per day. It has six manufacturing units spread across Uttar Pradesh, Haryana and Rajasthan, the website claims.