Haldiram-Pioneer team bids for Kwality

A consortium of Haldiram Snacks and Pioneer Securities has bid for Kwality, offering only a little above 6% of the stressed dairy product maker’s total dues to financial creditors, said a person aware of the development.

Kwality owes its lenders Rs 1,969 crore and Haldiram Snacks has offered Rs 128 crore, which means the creditors will be required to take a haircut of more than 93%. The homegrown sweets and snacks major has lined up another Rs 3 crore for settling claims of operational creditors as well as workers and employees.

The host of companies that had shown interest in the ailing dairy product maker initially included TPG Capital, Aion-affiliate Arcion Revitalisation, IndiaRF — a JV between Piramal Enterprises and Bain Capital, India Resurgent Fund and JK Group’s LVP Foods. But, only Haldiram submitted a binding bid.

The person cited above said that though the amount barely meets all obligations, the creditors have had multiple rounds of negotiations with Haldiram Snacks and this may be the final amount that the consortium is willing to pay.

The committee of creditors (CoC) of Kwality will discuss the plan further in its meeting on Saturday and will cast its vote, according to a company notification to the BSE.

Haldiram Snacks could not be contacted for comments. A mail sent to the RP Shailendra Ajmera of EY remained unanswered till press time on Friday.

Private equity fund KKR had invested Rs 520 crore in New Delhi-based Kwality Limited in 2016 through structured debt instruments to help it meet the capex requirements as well as pay off some highcost debts. Kwality, however, failed to stick to the repayment schedule and was referred for insolvency resolution to the National Company Law Tribunal (NCLT) Delhi bench last December.

In its last annual report, which is of FY18, managing director Sanjay Dhingra had said that lack of working capital had been affecting Kwality’s performance. It incurred a net loss of Rs 3,216 crore in FY19 against a profit of Rs 92 crore in 2017-18.

Kwality, led by chairman Rattan Sagar Khanna, was best known for its ice creams. It sold the brand to Hindustan Unilever in 1995, giving birth to Kwality Walls that combined Kwality with the UK-based Wall’s frozen desserts brand.

Kwality has since been operating as a business-to-business supplier, while in the consumer space, it produces milk, ghee, butter, milk powder, curd and cheese under the brand Dairy Best.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/haldiram-pioneer-team-bids-for-kwality/70920742