Dharani Sugars & Chemicals Exits Insolvency Process, To Restart Operations Soon

Listed company Dharani Sugars & Chemicals Ltd., exited the insolvency process and returned to its original promoter the PGP Group.

This follows the decision of the Chennai bench of the National Company Law Tribunal, which allowed an application filed by promoter PGP Group for settlement and revival of Dharani Sugars & Chemicals.

The company’s Chairman Dr. Palani G. Periasamy expressed happiness over the NCLT’s order and assured his commitment to revive sugar and allied businesses.

“The NCLT order comes at a time when the growth prospects look promising for the Indian sugar sector with growing demand,” he said.

The application was filed under Section 12A of the Insolvency and Bankruptcy Code.

Section 12A permits withdrawal of an insolvency application against a corporate debtor, if approved by at least 90% of the Committee of Creditors in cases admitted under Section 7, Section 9, or Section 10 of the IBC.

Following admission of the application, Dharani Sugars and Chemicals has come out of the insolvency resolution process.

“The IRP is directed to hand over the management to the Board of Directors whose powers stood suspended by virtue of the initiation of the CIRP by this Tribunal while admitting the Petition in IBA/976/2019 vide Order dated 29.07.2021,” the NCLT order said.

“The Corporate Debtor is released from all the rigours of the IBC, 2016. The IRP is discharged from all his responsibilities. The Corporate Debtor shall operate through its own Board,” the order added.

“Accordingly, IA(IBC)825/CHE/2024 stands allowed, IBA/976/2019 stands dismissed as withdrawn,” it said.

DSCL has three sugar plants in Tamil Nadu. DSCL was the first sugar company in Tamil Nadu, promoted by NRI investors and led by Dr. Palani G. Periasamy.

This is the second victory for the PGP Group before the NCLT. Sometime ago, the group regained control of Appu Hotels, which runs the iconic Le Royal Meridien, Chennai and Le Meridien, Coimbatore.

Dharani Sugars & Chemicals had suffered losses during the 2016–19 period.

As a result, the loans of the consortium of lenders could not be paid and the company was admitted into Corporate Insolvency Resolution Process by the NCLT, Chennai Bench in July 2021.

The promoters did make efforts to revive the company by making payment to the banks and exit the insolvency resolution process. They had paid 35% of the agreed amount to the consortium lenders as part payment and submitted a proposal under Section 12A of the IBC Rules.

Since the promoters couldn’t arrange the balance funds on time, the NCLT Chennai Bench issued orders for liquidation of the company on March 18, 2023.

The liquidation order was challenged in the Supreme Court, which granted a stay of the above orders in August 2023.

At the same time, the National Asset Reconstruction Corporation Ltd. had taken over the loans from the consortium lenders, which included 10 banks, except the loans from IREDA and Sugar Development Fund.

The 12A proposal was approved by the Committee of Creditors comprising NARCL, IREDA and SDF with a voting share of 92.6%, and the lead bank submitted the proposal to withdraw the CIRP process through the Resolution Professional.

The 12A proposal was approved by the NCLT’s Chennai bench on May 8.

As a result, DSCL has come out of the CIRP process and the powers of the company’s board of directors are restored with immediate effect. Since then, the original promoters have taken over the control and management of the affairs of the company.

Sources said that the company’s operations would be revived within three months.

“This development will help revive the three sugar factories located in Vasudevanallur (Tirunelveli district), Polur (Tiruvannamalai district) and Kallakurichi (Sankarapuram district) and employment in the rural areas,” the company said in a late evening note on Friday.