Since the corporate insolvency law - Insolvency and Bankruptcy Code (IBC) - came into existence in May 2016, the court has adjudicated liquidation of 486 companies lock, stock and barrel. Interestingly, a few interesting brands that enjoyed high recall value in the past failed to find a buyer in the lengthy resolution process. These are now available at junk price on the liquidation table. Reid & Taylor, Rotomac, LML, Moser Baer and Zenith Computers are among the once popular brands that are waiting to see a buyer turning up.
The resolution professionals have been able to dissolve just 11 companies until June. They have not been able to liquidate other 128 firms even after crossing one year. The Insolvency and Bankruptcy Board of India (IBBI), in its report in June, published the liquidation value of 330 companies of the total 486 and it comes to around Rs 10,846 crore. Ironically, the creditors had submitted claims for a whopping Rs 2.77 lakh crore for these 330 firms. The big brands that failed to find a buyer are:
Rotomac had a glorious past and was the top player in the pen market over the last two decades, until its founder Vikram Kothari was arrested by CBI in a loan defaulting case in February 2018. Kothari's father Mansukhbhai was an entrepreneur and founded a 'paan masala' empire in Kanpur in 70s. The father established his business under 'Pan Parag' brand, which was a raging success as bollywood actors Shammi Kapoor and Ashok Kumar used to feature in its TV advertisements. Vikram Kothari and his brother Deepak helped their father diversify the business empire in the early 90s and launched a company called Rotomac Pen.
The brothers separated in late 90s and Vikram Kothari took charge of the stationery and pens business. The business scaled up across India. It was advertised massively with tagline "likhtey, likhtey, love ho jaaye". The brand ambassadors were Bollywood actor Salman Khan and Raveena Tandon.
In February, the Lucknow bench of Allahabad High Court granted eight weeks' bail to Vikram Kothari, who is accused of duping the banks and defaulting on loans worth Rs 3,695 crore. Rotomac Exports and Rotomac Global went to bankruptcy last year and the court has decided to liquidate both the companies.
LML was incorporated as Lohia Machines Private Limited in 1972. The company was engaged in the manufacturing of synthetic yarn making machines. The company had signed a technical collaboration agreement with Piaggio of Italy in 1984 and started manufacturing scooters. The most successful of the scooter brands that the joint venture produced was the iconic LML Vespa. LML ceased its partnership with Piaggio in 1999 after a protracted dispute. LML continued production to sell the model Stella in the US market and by other names in different markets. In 2012, the iconic Vespa reentered the Indian market and started production without a local partner.
Kanpur-based LML issued a notice of insolvency on 2 June 2017 and closed down permanently in 2018. The bankers have rejected a resolution plan for the scooter maker after the top bidder Rimjhim Ispat offered about Rs 100 crore less than the liquidation value for the mothballed company. NCLT Allahabad Bench has ordered the liquidation of LML in March 2018.
The resolution applicants were largely interested in the real estate value of the assets. They were not serious in reviving the unit, said the insolvency professional after the company was taken to liquidation.
The company had about Rs 243 crore of debt, while lenders and the workers together put up a claim of about Rs 500 crore. The company used to employ about 2,000 people.
Reid & Taylor
The S Kumars Group was established in 1943 by Shankarlalji Surajmalji Kasliwal in Indore. It was taken over by his sons, Abhaykumar and Shambhukumar. The Kasliwal family grew it as a multi-dimensional enterprise. The group diversified into information technology (IT), energy, leisure & entertainment and retailing over the last three decades. However, the flagship business continued to be the S Kumars school uniform all these years. The Mumbai-based Kasliwal family legally split the businesses in 2007/08 among the third generation in business.
S Kumars school uniform was taken over by Mukul and Warij Kasliwal, while Nitin Kasliwal got the glitzy S Kumars Nationwide (SKNL), which sells brands such as Reid & Taylor (worsted suitings) and Carmichael House (home textiles). The cousins were in competition to build their business empires. In the race, Nitin Kasliwal's business got stuck in the debt quagmire. SKNL and Reid & Taylor failed to meet their financial obligations and defaulted on the loans. The companies were taken for insolvency last year. Reid & Taylor and SKNL together had a debt of over Rs 9,000 crore. The committee of creditors had in December 2018 decided to go in for liquidation as they received no resolution plan, though there were eight expressions of interest.
Reid & Taylor was a fashion brand, which was once endorsed by Bollywood icon Amitabh Bachchan.
Hindustan Paper Corporation
The Indian government set up Hindustan Paper Corporation (HPC) in 1970 when the country faced shortage of paper. HPC was entrusted with the task of producing substantial volumes of cultural varieties of paper and newsprint to maintain stability of price in a volatile market. The company supplied newsprint to most of publications. It built four paper mills over the period of time, but failed to survive amid cheap imports, especially from China over the last one decade.
HPC is the holding company for Hindustan Newsprint and Nagaland Pulp & Paper Company. It has four paper mills. The creditors claimed about Rs 3,000 crore from the company, but only Rs 2,000 crore has been admitted. The company has about 1,200 permanent employees at its two paper mills. The employees have not received their salaries for two and a half years, reports say.
Incorporated in 1994, Karuturi had become the world's largest cut rose producer by 2008, exporting about 1.5 million stems of 40 different rose varieties a day to Japan, Australia, South-East Asia, West Asia, Europe and North America. Most of its production came from two African countries - Kenya and Ethiopia. In about 15 years of operation, the company had broken into the mature rose market dominated by European farmers, capturing about nine per cent of the European market share.
Karuturi was cited by India as an exemplar of the country's economic investments in Africa. It was for cost benefits Karuturi shifted its production to Africa in 2005. In 2008, Karuturi Global made international headlines when it leased 300,000 hectares of land in southern Ethiopia with the stated aim of becoming the world's largest food producer. But the operations of the firm were coming to a near standstill following incessant labour disputes in the African countries. Taxmen have sued him for violating Kenya's tax code.
At this time, the firm was also struggling to make its debt obligations. Karuturi Global also owns large rose farm holdings in Tanzania, Pune and Bengaluru, and grows over 555 million stems of roses a year across 300 hectares. Karuturi Global also ventured into other business realms. These include food processing, floriculture retail including a flower auction portal and information technology.
The insolvency resolution process has been initiated against Bengaluru-based firm in August. But the group company Karuturi Food Pvt Ltd is already under the hammer for liquidation.
An Indian entrepreneur Deepak Puri founded Moser Baer India in New Delhi in 1983 in technical collaboration with Maruzen Corporation, Japan and Moser Baer Sumiswald, Switzerland. The company diversified into data storage business and manufacturing 5.25-inch floppy diskettes in 1988. Puri went ahead of time and the company advanced to compact disks (CD) manufacturing in 1999. It built high-capacity plant to manufacture recordable Compact Disks (CD-Rs) and recordable Digital Versatile Disks (DVD-Rs).
The company became the only large Indian manufacturer of magnetic and optical media data storage products, exporting around 85 per cent of its production. In 2006, the company expanded into the Photovoltaic cells and Home entertainment industries.
The company had a debt of around Rs 4,400 crore before filing for bankruptcy. The company also failed to find a buyer despite its legacy that go in tandem with the digital evolution of India in one phase. The company was ordered liquidated due to its bankruptcy in September 2018. The liquidation value of Moser Baer is Rs 334 crore. The NCLT has also directed Moser Baer Solar to go under liquidation, as the debt-ridden company failed to get any resolution plan from any firm within the mandated 270 days.
Zenith Computers, which started in 1980, is the first Indian personal computer (PC) company to reach the hinterland with its retail outlets in 2001. The company that was founded by serial entrepreneur Rajkumar Saraf has been aggressive in bringing the latest technology products to the Indian market. About 10 years ago, Zenith had 500 Zenith PC World stores and 1000 dealers nationwide. The PCs and laptops of the company were available in South America, Europe, Middle East and Africa.
The company had 15 branches and a 60,000 sq ft factory in Goa. Its customers include Intel, IBM, Tata, Godrej, HDFC, Mahindra, Toyota, ITC and even Microsoft. Saraf was also been responsible for introducing pioneering technologies into India, besides introducing networking in India and notebook computers.
Zenith Computers had total outstanding loans of Rs 92 crore as on March 2017. The company failed to attract any buyers and NCLT ordered to take it for liquidation. The liquidation value is just Rs 11 crore.