The institutions' divergent claims have thrown a spanner on the sale of Baroda Rayon's office floor at Hoechst House, Mumbai to IL&FS. Though the company had reached an understanding with IL&FS for the sale of its 17th floor premises, ICICI has raised objections regarding distribution of the sale proceeds. The company is expected to get Rs 12 crore if the sale comes through.

It is believed that ICICI has claimed for a part of the proceeds since the company had defaulted on the payment of liabilities. IL&FS counters this argument by saying that ICICI does not have any charge at all.

IL&FS says Baroda Rayon owes it Rs 8 crore by way of a debenture issue, and it is not a part of theinstitutional loans.

"ICICI is raising unnecessary objections, which prevent the company from undertaking the sale. The sale of the 16th floor to IL&FS had also got delayed owing to ICICI's rigid claims. Since the company board has approved the sale, it will happen very soon," said sources close to IL&FS.

Sources say ICICI has no other option but to adopt a rigid stance since Baroda Rayon has been defaulting on its loans for a long time. Baroda Rayon's institutional liabilities are around Rs 70 crore. ICICI in its capacity as the lead financial institution has been striving hard to bring the company back on the rails, but in vain owing to sluggishness in the polyester industry and aborted asset-sale plans. It has recently appointed AF Fergusson as an independent valuer for the sale of its viscose-filament yarn (VFY) plant at Surat.

The company's future plans have hit a roadblock with the two institutions unwilling to budge. The company's plan of paying off its institutional liabilities before it can goahead with its much-touted restructuring exercise has gone haywire, sources close to Baroda Rayon said.

The sale of the office floor is essential, as other asset-sale plans including that of the VFY plant to Indian Rayon are under suspended animation. If the institutions fail to arrive at a consensus, the company's future will be in jeopardy, sources said.

Baroda Rayon's losses have mounted with the company reporting a net loss of Rs 29.11 crore for the year ended March 31, 1998, against Rs 19.83 crore (net loss) during the same period last year. Lack of working capital has been cited as the reason for its disastrous performance.