As part of the restructuring plan submitted to financial institutions, the promoters had promised to bring in Rs 50 crore as interest free funds for other group companies from the sale of Modern Denim.

The promoters had also agreed that in case they fail to do so, the financial institutions would have the automatic right to put on sale the particular asset or any other asset in the group.

The group has told the FIs that it was not able find a buyer for Modern Denim due to the depressed market conditions. It had engaged Jardine Fleming and ANZ Investment Banking to find a suitable buyer for Modern Denim.

Significantly, on the basis of this clause, FIs had given anin-principle approval to the debt restructuring of the group envisaging sacrificing of overdues up to Rs 40 crore.

Modern group's total outstanding with the FIs and banks is estimated to be over Rs 700 crore.

Institutional sources further said that the FIs were earlier considering moving court in order to enforce sale of assets in the group. They felt that that the group should get out of the loss-making business and concentrate on profit making business like Modern Insulators.

Modern group is comprised of Modern Syntex, Modern Threads, Modern Insulators, Modern Terry Towels and Modern Denim.

The total institutional dues of Modern Syntex is estimated to be approximately Rs 298 crore and that of Modern Threads is approximately Rs 115 crore. The overdues of Modern Denim and Modern Terry Towels are Rs 159 crore and Rs 116 crore respectively. Modern Insulators also has an overdue of Rs 25 crore with the FIs.

As per the projections the group had submitted with the institutions Modern Syntex is expectedto come out of red in the current fiscal. The same is case with Modern Threads, Modern Terry Towels, Modern Denim. The only exception is Modern Insulators, which was expected to come out of red by the end of last fiscal. Further, the group is also believed to have defaulted on interest payment amounting to Rs 60 crore in the last fiscal. Sources said that the matter is being regularly discussed between the Modern group and the FIs, and, likely to be taken up at the next meeting of head of institutions.