A senior Modern group official confirmed that the recast plan is under preparation and a one-year extension for repayment will be sought.

The industry circle is agog with rumours that the group company Modern Syntex has struck a polyester conversion arrangement with Reliance Industries.

The company official denied this by saying that no such conversion arrangement has been struck and the company is selling polyester chips to RIL as to any other customer.

The group has defaulted on payments and its recent repayments stands at a meagre Rs 2.64 crore. The repayment has been made by group company Modern Insulators which has earned a profit in 1998-99.

The othergroup companies continued to be in the red. The group companies -- Modern Syntex, Modern Thread, Modern Terry Towels and Modern Denim -- together posted a loss of Rs 172.49 crore in the last fiscal.

The FIs earlier had stipulated certain conditions which included fresh infusion of funds to the tune of Rs 50 crore by the promoters by selling off Modern Denim. Jardine Fleming has been given the mandate for finding out a suitable buyer for Modern Denim which is yet to find one. Though the prospect for the sale of the division appears to be grim, the group does not have any plans to close down Modern Denim.

The Singhanias-controlled Raymond Synthetics has also recently approached the financial institutions for an extension in the loan repayment period by nine to 12 months.

The extension has been sought in anticipation of a revival in the polyester market fortunes in less than a year. Raymond Synthetics, which has been defaulting on repayment for over a year, has institutional liabilities amounting to Rs 70crore. However, the institutions are yet to okay the proposal. A restructuring proposal by Mafatlal Industries is also under scrutiny by the financial institutions.