Kalpraj Dharamshi, Rekha Jhunjhunwala-Led Consortium Declared Winner For Ricoh India
As per the resolution plan, Ricoh India will be merged with Bidco, 50% held by Kalpraj Dharamshi and Rekha Jhunjhunwala.
The Mumbai bench of the National Company Law Tribunal has approved a resolution plan for Ricoh India Ltd. that was submitted by a consortium of two investors.
The imaging and printing company, which owes nearly Rs 2,519 crore to its financial and operational creditors, had filed a voluntary insolvency application in January 2018. The dedicated bankruptcy tribunal admitted Ricoh India’s plea in May 2018 and appointed Krishna Chamadia as its resolution professional.
Ricoh India has been grappling with problems due to fraud and mismanagement since 2015. Its troubles mounted in September 2015 when its newly appointed auditor, BSR & Co., flagged financial discrepancies in the company. The Securities and Exchange Board of India cracked down on the alleged accounting fraud by directing a second audit of its accounts. Japan’s Ricoh Company Ltd. withdrew financial support to Ricoh India in October 2017, causing further operational difficulties.
A single-member bench, comprising judicial member MK Shrawat, approved the resolution plan of the consortium—comprising Kalpraj Dharamshi and Rekha Jhunjhunwala—after Ricoh India’s committee of creditors evaluated resolution plans received from strategic investors and valuation by two independent valuers.
Here are the key details of Ricoh India’s resolution plan:
Resolution Applicants
The committee of creditors called for expression of interest for the imaging company from prospective resolution applicants in July 2018, with a deadline to put forth the plans by August 2018. It received expressions of interest from nine applicants, including Ricoh India’s competitors, asset reconstruction companies and private equity funds.
Also, four additional expressions of interest were received from Kotak Investment Advisors Ltd., Karvy Data Management Systems Ltd., WeP Peripherals Ltd. and the consortium beyond the deadline. The creditors’ committee rejected Karvy’s proposal as it failed to submit a bank guarantee, while WeP’s plan was rejected after it failed to submit a revised resolution plan.
Ricoh India’s committee of creditors approved the resolution plan submitted by the consortium with 84 percent approval vote in February this year. Kotak’s bid, too, didn’t find favour with the committee.
Details Of the Approved Resolution Plan
According to the resolution plan approved by the tribunal, Ricoh India will be merged with a special purpose vehicle called ‘Bidco’, which will have a paid-up capital of Rs 32 crore. Dharamshi and Jhunjhunwala presently hold 50 percent stake in Bidco.
The merger will result in a fund infusion of Rs 52 crore, mainly in the form of Bidco’s Rs 32-crore share capital and Rs 20 crore as unsecured optionally convertible debentures issued by Ricoh India in favour of the consortium.
The consortium has proposed to delist Ricoh India by offering an exit price of Rs 50 per share to existing public shareholders. The consortium offered the erstwhile promoters—NRG Group and Ricoh Company Ltd.—Rs 2.49 crore against their 29.27 million shares in Ricoh India. Failure to accept this proposal would result in cancellation of their shares in the imaging company, according to the plan.
The plan also provides for an additional discretionary payment of Rs 50 crore by the consortium to Ricoh Company Ltd. after nine years to obtain its support for operations.
Additionally, the Ricoh India resolution plan provides for:
- Financial and operational creditors that are related parties to Ricoh India would get about Rs 1 crore in return for assignment of their claims aggregating to more than Rs 1,500 crore in favor of Bidco.
- Non-related operational creditors would receive hundred percent payment in the form of a full and final settlement against their admitted claims of Rs 19 crore.
- Workmen and employee dues will be paid in full, to the tune of Rs 1.15 crore.
Waiver of Statutory Dues and Certain Claims
The tribunal, while relying on a past judgement, granted exemption to the winning consortium from:
- Outstanding statutory dues owed to the government, including dues towards income tax and stamp duty.
- Certain other claims received by the resolution professional.
Minority Shareholders’ Plea Against Ricoh India
Nearly 165 public shareholders owning a combined stake of 2.3 percent stake in Ricoh India had filed a petition at NCLT Mumbai in February 2018 accusing oppression and mismanagement. They wanted Japan’s Ricoh Company to purchase their shares for about Rs 94 crore at Rs 1,029 apiece, the price prevailing as on June 30, 2015, before an alleged accounting fraud took place at the company.
The matter is yet to be disposed of by the tribunal.