Indian sugar giant, Bajaj Hindusthan Sugar, has informed the Bombay Stock Exchange (BSE) that the National Company Law Tribunal (NCLT) is reviewing State Bank of India's (SBI) decision to withdraw its insolvency claim after the settlement of outstanding debts amounting to Rs 4,771 crore ($639 million) through debt-restructuring schemes. This hearing, scheduled for October 25, 2023, concludes a drawn-out period during which creditors suffered substantial losses and took legal action against the company over its debts. SBI was reportedly owed Rs 1,192 crore ($160 million).
Bajaj Hindusthan, once classified as a non-performing asset due to its fiscal instability, has had a significant impact on the sugar industry given its dominant role. The company operates more than 14 factories mainly in Uttar Pradesh and its financial health greatly affects around 600,000 sugarcane farmers in the region. As per InvestingPro data, Bajaj Hindusthan is a prominent player in the Food Products industry.
During the sugar season of 2021-22, Bajaj Hindusthan accounted for a 12% share of Uttar Pradesh's sugar production. The company's operations are intertwined with the livelihoods of local farmers, with over 13% of sugarcane farmers in the area associated with the corporation. The outcome of this NCLT scrutiny could have far-reaching implications for the company and the broader sugar industry in Uttar Pradesh.
InvestingPro Tips highlight Bajaj Hindusthan's strong return over the last year, and a large price uptick over the last six months. These factors, alongside the company's high shareholder yield and valuation implying a strong free cash flow yield, indicate a potential for future growth, despite the company not being profitable over the last twelve months.
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