In fact, a team from EID Parry is said to have visited Kothari Sugars' plant last week.

The flagship company of the HC Kothari group surprised the corporate world when it posted a massive loss of Rs 43.90 crore on a turnover of Rs 121 crore in 1997-98. Another Rs 20.37 crore was added in the first half of 1998-99.

Mounting losses forced it to seek restructuring of loans from the institutions. The institutions, according to well-placed sources, have indicated their willingness to restructure provided the existing management infuses funds to turn around the company. But the tight liquidity situation of the group as a whole seems to be the stumbling block,forcing the parties concerned to look at the sale option.

Chairman and managing director BH Kothari said: ``I would like to go through with restructuring ideally but if the institutions feel that restructuring is not possible and that some assets have to be sold, then there is no choice.'' He however said that the company was still discussing possible restructuring with institutions.

A senior EID Parry official refused to either confirm or deny the developments. EID Parry has been agressively looking out for increasing and consolidating its sugar capacity and had recently taken over Cauvery Sugars. It was also in the race for buying ailing Aruna Sugars.

The management is said to be veering to the view that unloading the sugar and distillery businesses would generate the necessary cash which can be used in other ailing group companies such as Kothari Petrochemicals etc. Once the sale is effected, it is proposed to merge Kothari Petrochemicals and the chemical division of Kothari Sugars, a well placedsource said.

Kothari Sugars is an unusual example of a company actually getting crushed by new technology. The nemesis came in the form of the Rs 33 crore cane separation system. This technology, which helps in the production of high quality sugar by removing the epidermis of the cane along with impurities, was introduced in the country for the first time.

The plant failed to perform at expected levels with recovery loss as high as one per cent in the cane separation process itself compared to the conventional process. Moreover, the plant could not be run anywhere near its full capacity of 1,200 tonnes crushed per day (TCD). The company, according to Kothari, is giving a last shot in the coming season and if the plant fails to respond, the project has to shelved.

The co-generation plant also contributed to the company's woes as a result of a 11 month time over-run and the resultant overshooting on costs. Once commissioned, its efficiency level did not match that specified by Tamil Nadu Electricity Board(TNEB). TNEB is presently levying a penalty on the sale price due to this problem.

The chemical business of the company is running at less than the viable capacity. The Sanga Reddy nitric acid plant, taken over in 1994, is becoming unviable as a source of raw material for the nitroaromatics unit at Karaikal considering its cost of production and freight. Liberalisation has resulted in nitric acid available at much cheaper prices.

The nitroaromatics unit is running at less than 40 per cent capacity due to corrosion of major equipments and columns which require some investment for repairs. Unless the capacity utilisation of the chemical units are increased beyond 80 per cent, that segment of the business will not revive, analysts say.