The consortium of lenders to S Kumars Nationwide (SKNL) has filed a claim under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act to recover R3,000 crore in overdue loans from the cash-strapped company.
The 12-member consortium led by Bank of India includes State Bank of India, ICICI Bank, Punjab National Bank, IDBI Bank, Union Bank of India and UCO Bank.
“The company is not routing its payments through required channels, so banks are not able to keep track of their earnings,” a banker told FE. Bankers said they were forced to issue the notice as the promoters of the company have not been able to monetise assets to repay loans. For most of these 12 banks, the account is now classified as a non-performing asset.
The Sarfaesi Act allows lenders to recover funds by sale of fixed assets by a secured creditor.
If the borrower fails to make payments within 60 days of the notice, the lender can take possession of the borrower's secured assets to realise dues.
Led by its promoter and managing director Nitin Kasliwal, SKNL is known for its marque brand Reid & Taylor. The company has seen a slump in the textile and apparel business and its shares have crashed 90% in the last year.
SKNL was loaned the Rs 3,000 crore against the collateral of certain fixed and current assets. The consortium also has some SKNL shares pledged with it, apart from a personal guarantee from Kasliwal. The value of the guarantee and the collateral could not be ascertained immediately.
In May, UCO Bank had issued a newspaper notice with Kasliwal's picture, warning the public against dealing with the company’s director, who it termed a defaulter. Corporation Bank, which has an exposure of Rs 75 crore to SKNL has said that it would start action against the company soon. Corporation Bank is not part of the lenders' consortium.
For the quarter ended March 2013, S Kumars reported a net loss of Rs 429 crore compared with a profit of Rs 56.98 crore in the same quarter last year. The company also reported at 12% drop in