The Rs 525-crore Modern Syntex is the beleagured group's second company that is now up for sale following Jardine Fleming's failure to find a buyer for the Rs 96-crore Modern Denim, even six months after the December 31 deadline set by the financial institutions (FIs).

The sale of Modern Denim was one of the pre-conditions laid down by the institutions when they agreed to reschedule interest repayments and forego other charges of around Rs 40 crore last year.

The FIs, while granting an in-principle approval, had stipulated that the Rankas should bring in around Rs 50 crore by selling Modern Denim.

A trigger option was stipulated which gave FIs an automatic right to put on sale the assets of Modern Denim or any other group company to mobilise Rs 50 crore without making any further reference to the promoters in casethe deadline was not met.

Group sources said: "The institutions understand that we have done what we could to sell Modern Denim. We kept them informed of every step taken to work a way out."

The sources said that formally no merchant banker has yet been appointed to conduct the sale of Modern Syntex, but the group on its own has set itself the task of finding a buyer.

As the share prices of all the Modern group companies are languishing below par, only the sale of industrial assets of the two companies can go towards bailing the group out.

In the last six months, the group has neither paid interest on its outstandings nor a part of the principle.

As on March 31, 1998, Modern Syntex had a debt-equity of 2.06:1 and accumulated losses of 86.33 crore. Its borrowings were at Rs 584.22 crore and paid-out interest charges at Rs 65.45 crore.

Modern Denim, at the end of 1997-98, had accumulated losses of Rs 36.56 crore and a debt-equity ratio of 2.75:1. The company had borrowings of Rs 258 crore andinterest charges at Rs 33.81 crore. It is a marginal player in the polyester filament yarn industry with an installed capacity of 52,500 tonnes per annum.

Earlier, as reported in The Financial Express, the group was forced to shelve its proposed Rs 1,660-crore paraxylene and PTA project in Gujarat.

In its proposal to the institutions for a financial bail-out, the group had stated that it was facing financial problems due to industry-wide recession and stiff competition in the textile industry.

The group had further said that closure of some of its units in 1996-97 and the pressure of withdrawal of fixed deposits without fresh inflows, following the CRB imbroglio had resulted in a shortfall in the working capital. This lead to serious liquidity problem and large defaults to institutions, banks and mutual funds.