Freightco India Ltd. moved the National Company Law Tribunal to initiate insolvency proceedings against Jain Farm Fresh Foods Ltd.—a subsidiary of debt-laden Jain Irrigation Systems Ltd.—for not paying dues.
Jain Farm Fresh, which is in the business of food processing, hasn't made any payment to the operational creditor since November, according to the logistics services provider's petition with NCLT on June 27. Freightco India claimed a receivable, or payment from clients, worth Rs 1.04 crore from the company.
Jain Farm Fresh, nearly 82 percent of which is owned by Ashok Jain and family-controlled Jain Irrigation, had reported revenue worth Rs 1,632.94 crore as of March 2018 and suffered a loss of Rs 43.53 crore, according to disclosures made in the parent's annual report. The company's borrowings stood at Rs 1,183 crore as of March 2019, said a note by rating agency ICRA Ltd.
On June 28, ICRA downgraded Jain Farm Fresh's debt instruments, citing high debt and moderate debt coverage indicators—the ratios indicating whether a company can meet its debt and interest payments.
The rating agency also cited deterioration in the parent's credit profile and borrowings and an increase in collection cycle—number of days taken to collect accounts receivable—as reasons for a negative outlook. Jain Irrigation is yet to respond to BloombergQuint's emailed queries