2 min read.Updated: 13 Dec 2018, 09:02 AM ISTMaulik Vyas
Corporation Bank has filed with NCLT Mumbai a bankruptcy case against Premier Ltd to recover dues of 52 crore
Mumbai: Two decades since the last Premier Padmini rolled off its factory, the maker of the iconic sedan is staring at the end of the road.
After decades of dominating India’s roads, along with Hindustan Motors Ltd’s Ambassador, the Padmini bowed out in 1997, making way for modern Japanese, Korean and American cars. In the two decades that followed, Premier Ltd made an unsuccessful foray into engineering, arriving finally at the bankruptcy court last month for defaulting on dues of ₹ 52 crore.
State-run Corporation Bank has approached the Mumbai bench of the National Company Law Tribunal (NCLT) to recover dues from Pune-based Premier, said a person aware of the matter. The matter is yet to be listed for a hearing.
“The dues include the principal amount of ₹ 31.17 crore and interest. The bank had declared the company a non-performing asset (NPA) sometime in May 2016," the person cited above said on condition of anonymity. “The bank has also suggested Atul Jain, partner of audit and consulting firm GMJ and Co., as interim resolution professional in its petition filed in the tribunal."
Premier did not respond to a query from Mint.
In a regulatory filing on Wednesday, Premier said it had talks with Corporation Bank since it received the insolvency notice, including on 11 December 2018, to arrive at an amicable settlement. “Company has initiated steps to monetize its land assets in order to reduce its debt and is hopeful of completing the same by the end of the current financial year," it added.
“Corporation Bank has indicated to the company that it is open to considering an amicable settlement and the company is taking the requisite actions in this regard to achieve the same," Premier said, adding that it is also in talks with “Edelweiss Asset Reconstruction Co. Ltd, its majority secured debt holder, for a comprehensive restructuring plan".
Nishit Dhruva, managing partner of law firm MDP and Partners, which is representing the lender, confirmed approaching NCLT, but did not elaborate as the matter is sub judice.
After closing its plant at Kurla in Mumbai in 1997, Premier moved into engineering, manufacturing of wind energy components, power generation and infrastructure, but faced little success.
Premier’s roots trace back to 1952 when the company, then known as Premier Automobiles Ltd, signed a licence agreement to make in India a version of Fiat 1100, also known as Millecento.
The venture marked the beginning of an independent automobile industry in India, and was followed five years later by the Ambassador from Hindustan Motors, based on the British-designed Morris Oxford of the early 1950s.
In the pre-liberalization India of limited purchasing options, the two cars became the vehicles of choice for consumers. Users loved their ability to manoeuvre potholed roads, and both found loyal buyers, until the Maruti 800 appeared on the scene, luring away a new generation of car buyers.
As Maruti Suzuki India Ltd, earlier known as Maruti Udyog Ltd, and other rivals expanded their presence, Ambassador and Padmini took refuge in the taxi segment and held fort for a while, before the Bombay high court ruled in 2009 that taxis older than 25 years be taken off the roads. In the years that followed, Padmini cabs started fading away from Mumbai’s roads, one of its last bastions. Production of the Ambassador stopped in 2014 and the brand was eventually sold to France’s Groupe PSA.
In 2017-18, BSE-listed Premier posted a net loss of nearly ₹ 124 crore on a revenue of ₹ 20.07 crore. It ended the year with a net debt of ₹ 375 crore.
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