Raj Oil lenders to honour FD dues

MUMBAI: Around 1,500 fixed deposit holders who had invested in Raj Oil Mills, the makers of Cocoraj Coconut Hair Oil brand, have reasons to celebrate. After the company was referred to the bankruptcy court, FD holders had given up hopes of recovering their money. But lenders have decided to repay FD holders their dues in full, setting a precedent and raising hopes for small investors.


Lenders have agreed on a resolution plan where the entire principal overdue of FD holders would be paid back, even as banks will take a 50% haircut.


Edelweiss Asset Reconstruction Company had referred the company, which was popular in the ’90s for its hair oil brand Cocoraj and cooking oil Guinea Groundnut Oil, to the bankruptcy court last year. The other lenders include Karur Vysya Bank and Shamroa Vittal Cooperative Bank.

Earlier this calendar year, lenders had received two binding bids — Rubberwala Housing and Mukhi Industries. And both are in the oil trading business.

Lenders had voted in favour of Rubberwala Housing which offered Rs 62 crore to lenders against overdue of Rs 115 crore. “The move to settle loan of small investors signals that creditors have approved a resolution plan that protects the interest of all stakeholders,” said Siby Antony, chairman of Edelweiss ARC.

The dues of FD holders are close to Rs 4 crore. “Such instances disapprove earlier perception that medium and small cases might not get strategic bidders,” he said.

The total resolution plan involved is Rs 75 crore, of which Rs 62 crore would be paid to the lenders, and the rest of the money will be infused as equity capital.

Close to 900 companies are referred to the bankruptcy court and most of the companies are small to mid-sized with overdue ranging between Rs 200 and Rs 3,000 crore.

Last year, the government amended the law that banned defaulting promoters from bidding for their own companies facing bankruptcy until they cleared their dues. As a result, there were apprehensions that there may not be any bidders for small companies and it would result in many of them being liquidated.