ICICI Bank Takes Over Mardia Chemicals Unit Under NPA Act

Mumbai, November 28: | Updated: Nov 29 2002, 05:30am hrs
ICICI Bank has taken possession of one of the units of Mardia Chemicals Ltd located at Vatva in Ahmedabad district, as part of exercising its right as a lender under the Securitisation & Reconstruction Act, which was passed by both the Houses of Parliament recently.

"The bank has taken possession of the companys unit at 7.30 pm on Wednesday after the order of the chief metropolitan magistrate, Vatva, in Ahmedabad district, allowing the same. The company owed about Rs 1,450 crore to over 20 banks, including about Rs 800 crore of principal," ICICI executive director S Mukherji said on Thursday. The lenders include major financial institutions like IDBI, ICICI, IFCI, UTI, LIC, GIC and IIBI. Talking to FE, Mr Mukherji said that the bank had appointed Itcot (Industrial and Technical Consultancy Organisation of Tamil Nadu) as its technical consultant, and has taken insurance cover for the asset taken under possession so as to guard against any eventuality. The action of taking possession was delayed by three weeks as there were a lot of procedures to be followed, though the process was initiated immediately after the Supreme Court allowed the bank to do so, Mr Mukherji said.

Mr Mukherji said: "The initiation of action on the company will change the credit recovery scenario. Being the first to send the notice, we are also the first to initiate action on such a scale."

Despite many attempts, Ahmedabad-based Rasiklal S Mardia could not be contacted. Besides the Vatva unit, there are two other units of the company, one each at Ahmedabad and Mardianagar in Surendranagar district of Gujarat.

Ahmedabad-based Mardia Group topped the league tables of defaulters published by FE in August from the List of Loan Defaulters as on end-March 2001, published by the AIBEA, with Rs 1,073 crore. The other companies that have contributed to the debt burden of the group include Mardia Steels Ltd (Rs 201 crore), Amar Dyechem Ltd (Rs 26 crore) and Mardia Leasing & Financial Services Ltd (Rs 12.1 crore), while Mardia Chemicals Ltd had defaulted on Rs 734 crore as on March 31, 2001.

The company has earlier tried to pre-empt the takeover by the bank by approaching the Supreme Court seeking a stay on the notice issued by the bank and further action of taking possession by it after the mandatory expiry of 60 days period. However, the apex court has granted interim injunction on the part of ICICI, barring it from creating a third party interest (sale) on the assets, but allowed the FI to take possession of the companys units under the Ordinance in force then.

In the meantime, both the Houses -- the Lok Sabha and Rajya Sabha -- have passed the Bill. Presidential assent is still pending on the Bill, before it formally becomes a statute.

Regular hearings of the case with the SC is scheduled to begin on Friday (November 29), and the process for sale of the unit taken possession could be initiated only after verdict on the case, Mr Mukherji said.

ICICI Bank, which is the merged entity of ICICI Ltd with its banking subsidiary ICICI Bank, issued a notice to the company in June 2002, under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002.