Easun Reyrolle rode power-sector receivables into insolvency and liquidation

Easun Reyrolle Ltd, incorporated in 1974 and producing from Hosur since 1980, dominated India's power transmission components segment for nearly two decades. Promoted by the Easwaran family with 25 per cent equity from Reyrolle Parsons — a Rolls Royce Engineering subsidiary later taken over by VA TECH and then Siemens — it bought Canada's NxtPhase T&D and 60 per cent of the US Switchcraft Group, ran eight subsidiaries, and grew revenue from Rs 33 crore (FY2002, net profit Rs 69 lakh) to Rs 263 crore with Rs 45 crore of net profit in FY2010.

The next decade reversed everything: by FY2019 revenue was down to Rs 88 crore with a net loss of Rs 10 crore. The last annual report it filed blamed 'slow collection from Government sector undertakings, lack of working capital, backlog of orders and delay in execution'. Discoms alone owed it Rs 103 crore per the NCLT judgment; of Rs 168.58 crore in receivables, Rs 136 crore was overdue by over a month. 'Your company has been facing losses for the last five years which is mainly due to its operating cycle getting affected,' the report said. The stock fell from Rs 374 (2008) to Rs 1.57 (2020).

By its October 10, 2020 filing, Easun Reyrolle disclosed Rs 271.63 crore of loans including cash credit from banks and financial institutions. In May 2021, the NCLT in Chennai admitted an application by State Bank of India and Canara Bank under Section 7 of the IBC, putting the once-dominant manufacturer into corporate insolvency resolution — and, ultimately, on the road to liquidation.

Rs 271.63 crore owed to banks; stock fell from Rs 374.36 (2008) to Rs 1.57 (2020); NCLT admitted insolvency, with liquidation on the table.

The company let government-sector receivables stretch to Rs 136 crore overdue by more than a month while continuing to fund operations on debt.

Its operating cycle depended on working capital from banks, so slow discom payments converted directly into loss-making years — five in a row by FY2019.

Acquisitions and expansion (Canada, the US, Singapore, Sharjah) added fixed obligations just as collections slowed.

Once orders were backlogged and execution delayed, the revenue base collapsed from Rs 263 crore to Rs 88 crore while the debt stayed.

Revenue you cannot collect is not revenue: a supplier to state utilities that finances its own receivables is running its creditors' money through a turnstile that can stop.

As of the February 2022 report, Easun Reyrolle was before the NCLT with SBI and Canara Bank's insolvency case admitted in May 2021, its stock at Rs 3.27 and liquidation on the table — the last annual report on the BSE remained FY2019's.