Smart Agro Foods Ltd. is a listed entity at BSE and NSE. It started its operations since September, 2015. The Company is engaged in the business of trading of agriculture commodities. It was enjoying a working capital ca

Smart Agro Foods Ltd. is a listed entity at BSE and NSE. It started its operations since September, 2015. The Company is engaged in the business of trading of agriculture commodities. It was enjoying a working capital cash credit limit of ₹ 100 lakh and from West Bank Ltd. In the month of January, 2017, the company decided to expand its business activity and to undertake the manufacturing and processing of agro commodities. The expansion plan included manufacturing of tomato catch-up, bakery biscuits & cakes and packaged sweets of Rasgulla & Gulabjamun. For this ambitious expansion plan the company came out with IPO in June, 2017 to raise the money for purchase of land and erection of factory site at Telangana, Jadhpur and Bikaner. The issue was successfully completed and the company purchased the land and erected the factory buildings at the above three places. To meet out the cost of plant and working capital at these places the company availed consortium loans from three banks, including the present banker. The various credit facilities sanctioned by the consortium of three banks in April, 2019 were as under: Credit Facility West Bank Ltd. Jodhpur Bank Ltd. Bikaner Bank Ltd. Total Cash Credit (existing) 100 100 New Cash Credit Limit 75 (For Tomato Catch-up Division) 50 (For Bakery and Cake Division) 50 (For Sweets Division) 175 Term Loan (For Purchasing of Automatic Plant for Manufacturing) 40 (For Tamoto Catch-up Division) 25 (For Bakery and Cake Division) 30 (For Sweets Division) 95 Total 215 75 80 370 The company has offered the following securities for its cash and term loan to the bankers: Security West Bank Ltd. Jodhpur Bank Ltd. Bikaner Bank Ltd. Hypothecation of Book Debts 200# 60# 65# Hypothecation of Plant & Machinery 40 50+25=75 50+30=80 Value of Land and Building 1200 (At Telangana Industrial Area where Tomato Ketch-up is manufactured) 1500 (At Jodhpur Industrial Area where Baker and cakes are manufactured) 1000 (At Bikaner Industrial Area where Sweets are manufactured) # It represents the average of the book debts during the FY 2019-20. The company's performance during the FY 2019-20 was satisfactory. However, with the beginning of the FY 2020-21 the manufacturing activity got slow down due to nationwide closure on account of COVID-19 and migration of the workers. On account of this the company was not able to pay the instalments of the term loans to all the three bankers as well as the transactions in the cash credit account were also stopped and the company was not able to service the interest charged in the cash credit account. As a result, the accounts were classified by the bankers as Non-performing accounts (NPA). The West Bank Ltd. is the Consortium Leader. By the end of the June, 2020 quarter the accounts of the company were showing problems. From July, 2020 to Sept., 2020 the company could not deposit the EMI of term loan, no stock statements were submitted in cash credit accounts and no interest on outstanding amount of cash credit could be deposited. The accounts were classified as Sub-standard in the books of all the banks. The bankers insisted for recovery of the dues. The company pleaded that security pledged/hypothecated/mortgaged with the bankers is much more than the amount outstanding in the various loan accounts. The bankers did not accept the plea, continuously pressurised the company to pay the dues of the bankers else will take legal recourses available under various lows such as, Recovery of Debts and Bankruptcy Act, 1993, Insolvency and Bankruptcy Code, 2016 (IBC) and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). Based on the above facts, answer the following questions: How the NPA is to be recognised in: Cash Credit account