A non-banking finance unit of global private equity giant KKR & Co. has dragged Kwality Ltd to the bankruptcy court, the Indian dairy firm said on Wednesday.
KKR India Financial Services Pvt. Ltd has filed a petition before the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, Kwality said in a stock-exchange filing.
The company added that it had no information whether the NCLT had admitted the petition.
Citing people aware of the development, The Hindu BusinessLine had on Tuesday reported that Kwality may have defaulted on loans worth Rs 1,200 crore. Pegging the company’s overall debt at Rs 2,000 crore, it said that about this 80% of this had gone bad because of “poor business decisions”.
Kwality’s market value and financial performance have declined considerably over the past year.
Its stock price stood at Rs 9.81 apiece on the BSE at the close of trade on Wednesday. On the same date a year ago, it was trading at nearly Rs 100 apiece. The company's market capitalisation currently stands at Rs 236.77 crore.
Kwality’s revenues rose marginally to Rs 6,724 crore in the financial year 2017-18 from Rs 6,131 crore in the previous fiscal.
The firm had posted a net profit of Rs 71 crore in 2017-18, less than half the Rs 164 crore it recorded in 2016-17.
In 1994, the owners of Kwality sold the ice-cream brand to Hindustan Unilever.
The company that was set up to supply milk to Kwality Ice Creams India Ltd was acquired by the Dhingra family in 2002.
At the time of KKR’s investment in 2016, Kwality, which is mostly a business-to-business (B2B) supply firm, was aggressively working to enter business-to-consumer (B2C) and retail segments.
Kwality Ltd currently processes and produces various types of dairy products including milk, ghee, butter, milk powder, curd, yogurt and cheese under the brand ‘Dairy Best’.
Its milk processing plants have the capacity to handle around 3 million litres of milk per day, according to its website. Currently, Kwality has six manufacturing units spread across Uttar Pradesh, Haryana and Rajasthan.
India is the world’s largest producer of milk but the country’s dairy market is highly fragmented and is dominated by local milkmen and regional brands. Kwality is among the top players in the north.
Other listed dairy firms include Parag Milk Foods and Prabhat Diary, which have both been growing their businesses.