Mumbai, Dec 1: The restructuring of the ailing textile company Nirlon Ltd has come to a halt due to a tussle between two leading institutions-ICICI and Unit Trust of India-over a property sale. UTI has raised objections to the sale of two floors at the company's headquarters Nirlon House, Worli in Mumbai to ICICI.UTI says that the sale should be carried out at the current market price and not at the price prevalent in 1987, the period when the company leased out the floors to ICICI. ICICI has recently approached Appellate Authority For Industrial & Financial Reconstruction (AAIFR) for immediate settlement of the issue.
"The sale of floors is getting delayed due to differences between the institutions. AAIFR has recently asked ICICI and UTI to amicably resolve the issue," said Nirlon's head of corporate planning, AK Pandit.
Nirlon leased out the floors against a loan amount of Rs 2 crore from ICICI. The agreement also envisaged that ICICI would later purchase the floors for a sum of Rs 2.45 crore and the loan amount would be adjusted against the transaction, institutional sources said. The purchase could not materialise and ICICI has been occupying the floors for the last 12 years. With the Board for Industrial and Financial Reconstruction (BIFR) finalising a restructuring package for the company in August, the promoters struck a deal with ICICI for the sale of floors at the price agreed upon in 1987.
UTI objected to this by saying that ICICI would purchase the floors at the current market price of Rs 6 crore so that the company can pay a part of the institutional outstandings. The total institutional outstandings of Nirlon now stands at a whopping Rs 40 crore and UTI's exposure comes to around Rs 17 crore.
BIFR's recast package envisaged the sale of the company's prime property in Mumbai to clear the institutional dues. While other properties of the company is on the verge of being of sold off the dispute regarding the floors at its corporate house has delayed the entire recast process. Nirlon is planning to mop up at least Rs 17 crore from the sale of properties in Roha, Tarapur and Goregaon, said the sources.
After the repayment of debts, the company would confine its operations to the manufacturing of Nylon Tyre Cord. The company's tyre cord unit has a capacity of 10,000 tonnes.
The once-bluechip Nirlon's fortunes waned in the early '90s due to a recession in the textile industry. The institutions sanctioned a reschedulement package in 1993 and the company started making profits only to slip into the red again.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.