Mumbai, Feb 15: The Kapal Mehra-controlled Orkay has sold its corporate office in south Mumbai. The move comes in the wake of the company's botched-up sellout bid to the JVG group.Though the name of the buyer has been kept under wraps, a Mumbai-based paints company is said to have bought the property for around Rs 14-16 crore. Orkay officials confirmed that the ground floor of the company's corporate office at NKM International House had been sold and the entire staff was shifted to the first floor. Officals, however, refused to identify the buyer. The sale marks the beginning of a concerted effort to put the company back on the rails, which plunged headlong into financial trouble after the Delhi-based JVG group backed out of the takeover of its partially-oriented yarn (POY) plant at Patalganga. The money, sources say, will be used to pay off a part the institutional liabilities, which come close to Rs 100 crore.
The company was struggling to pay off the institutional liabilities following the reluctanceon the part of JVG to repay it.
The company has signed a memorandum of understanding with the JVG group in 1996 for the sale of the Patalganga unit for Rs 205 crore, which covered institutional liabilities amounting to Rs 100 crore.
As the lead institutional lender, IDBI is planning to recall the loans of Orkay as its concerted efforts to bring JVG into accepting the terms and conditions of the deal proved futile.
However, the institution is willing to give some more time to Orkay on the condition that it could come out with an exact repayment schedule.
IDBI has written letters to JVG over the last few weeks asking it to own responsibility for institutional liabilities of the Orkay group. Orkay owes Rs 40 crore to IDBI.
The IDBI has been going slow on the issue due to the procedural difficulties involved in the recovery of loans.
If Orkay refuses to honour the commitment, IDBI might even initate court proceedings to recover the loans, sources said.
Orkay, which posed a formidable threat toReliance Industries in the late eighties, slipped into the red following a downtrend in the polyster industry. With Reliance building up huge polyester capacities, players like Orkay and Baroda Rayon Corporation suffered severe a setback, which resulted in huge outstanding loans.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
