Simbhaoli Sugars shares slump 16% on loan default case

On March 28, 2018, Simbhaoli Sugars was under investigation by the Central Bureau of Investigation (CBI) for allegedly defaulting on loans obtained from the Oriental Bank of Commerce. According to reports at the time, the company stated it was committed to clearing its outstanding dues to the bank in due course through consultations with its lenders. The Oriental Bank of Commerce had previously filed a complaint against the Uttar Pradesh-based private sugar company in November 2017.

The CBI alleged in its First Information Report (FIR) that the bank sanctioned a loan of Rs 148.59 crore to the sugar company in December 2011. This financing was intended for sugarcane farmers under a tie-up arrangement. However, the account became a non-performing asset, and the bank declared it a loan fraud of Rs 97.85 crore to the Reserve Bank of India in May 2015. The FIR further alleged that the bank issued another corporate loan of Rs 110 crore in January 2015 to repay the previous debt, resulting in an overall loss of Rs 109.08 crore to the bank.

Several company executives, including the chairman, CEO, CFO, and executive director, were booked by the agency alongside unnamed bank officials. Media reports quoting CBI spokesperson Abhishek Dayal indicated that searches were conducted at eight premises, including the corporate and registered offices, a factory, and directors’ residences across Delhi, Hapur, and Noida.

According to cane department records, Simbhaoli was the largest defaulter on dues payments during that crushing season.