Differences have erupted over the general purpose debt with some institutions wanting to transfer it to the demerged entity and others keen on retaining it with the parent company. The Industrial Development Bank of India (IDBI) is the lead institution.

There is no dispute over the transfer of debt taken for specific purposes. The bone of contention is the general purpose debt for which a consenus has not been arrived as yet, said an IDBI official. The total institutional liability of the company is around Rs 90 crore

Enkay Texofood Industries managing director Tulsi Goyal told The Financial Express that institutional approval will come only after the issue of realignment of debt is resolved. Enkay Texofoods own two brands Onjus and Life in the fruit juice market.

With the institutional nod getting delayed, the entire restructuring of the company has come to a virtual halt. The recast strategy is to merge the demerged entity with another group company Avon Synthetics and concentrate on Enkay's food business.

The Goyals have already drawn up plans for expanding the food business with major launches lined up in the millenium year. The new product will cater to the needs of the mass market, company sources said.

Enkay Texofood has expanded the food business by creating new categories of products. For instance, Onjus which was launched in 1997 has become a Rs 100 crore product in a short span of two years. Onjus enjoys a 79 per cent market share with Dabur's Real way down in the second slot with only 12 per cent, industry sources said.

The rising value of Enkays' two popular brands Onjus and Life may have forced the institutions to pledge them against the outstandings of the company. It is believed that the Goyals have agreed to this proposal and will happen as and when the institutions agree on the recast proposal, sources said.

It is believed that the decision to hive off the textiles business was the result of Enkay's inability to offload 20 per cent stake to an international equity fund. FIIs were reluctant to invest in a company with unrelated businesses.

The hiving off the textile division may help Enkay rope in an investor at a later date as its food business is doing well, analysts said.