Return
to Story Page
To print: Select File and then Print from your
browser's menu
George Mathew
MUMBAI, JULY 5: The Modern group of the Rankas, with institutional debts of over Rs 800 crore, has gone deeper into the red. The four major companies in the Modern group - Modern Syntex, Modern Terry Towels, Modern Denim and Modern Threads - have made a whopping loss of Rs 172 crore for the year ended March 1999. With this, the total losses by these companies have touched Rs 351 crore in the last two years as they had made losses of Rs 179 crore in the previous year.
The group companies have made these losses after a massive restructuring of loans and reschedulement of interest repayments okayed by financial institutions last year. On top of this, the group companies have not made any interest payment on optionally fully convertible debentures (OFCDs) in 1998-99 as they are planning ``to approach the institutions for further restructuring'' of loans once again. In short, the group wants another bail-out by institutions.
As per the financial statements of these companies, they have not paid Rs 17.10 croretowards interest payment to banks and institutions during the year. ``Provision for interest amounting to Rs 715.42 lakh from October 1, 1998 to March 31, 1999 on accrued interest converted/convertible into OFCDs/deferred upto cutoff date (September 30, 1998) as per the restructuring scheme has not been made in accounts as the company intends to approach the financial institutions/banks for its further restructuring,'' said a financial statement issued by Modern Syntex.
Modern Syntex has also not paid Rs 2.97 crore towards interest on working capital borrowing in the case of its yarn division in Alwar. Similarly, Modern Denim has not provided Rs 145.80 lakh on OFCDs, Modern Threads Rs 282.06 lakh and Modern Terry Towels Rs 271.57 lakh as interest charges to various financial institutions on OFCDs. In all the cases, the reason is same: they are approaching the institutions for loan restructuring once again.
Modern Syntex, the flag ship of the group, which clocked a turnover of Rs 535 crore led the listwith a loss of Rs 87.49 crore for the year as against a loss of Rs 86.33 crore in the previous year. Modern Threads made a loss of Rs 35.88 crore as against a loss Rs 25.30 crore in the previous year. Modern Denim cut down its losses to Rs 13.89 crore from Rs 38.56 crore previously. However, its sales also dipped to Rs 25.66 crore from Rs 96.11 crore. Modern Terry Towels posted a loss of Rs 35.23 crore as against Rs 28.49 crore previously.
Financial institutions, in their earlier bail-out proposal, had suggested sale of various units to reduce the high debt burden of over Rs 800 crore. The group had put Modern Denim, which has been making successive losses, on the sale block, but it was unable to find any buyers. Modern Syntex is now planning to sell its spinning division in Alwar. Institutions had last year proposed loan reschedulements and interest charge waiver to bail out the company from financial problems.
When contacted, a senior official of the Modern group blamed the problems faced by the textileindustry for the mounting losses. ``Margins have been under pressure and the offtake is less. The market situation is very critical,'' he said, admitting that the group is approaching the institutions for restructuring of loans again. FIs, it is learnt, is not averse to another bail-out of the group.
The group was under pressure to pay back its fixed deposits last year following the collapse of CRB Capital Markets. The Modern group had been a frequent visitor to the capital market in the early '90s. However, the share prices of the group companies are languishing below the face value of Rs 10. With losses mounting and various group companies failing to make interest payment last year, the Modern group is now looking at the institutions for yet another bail-out.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------