This is the second major sell-out in the power sector after the Essar group's decision to sell its power company to Marathon of the US. ``In both the cases, the sell-out is identical. Promoters of both the groups were facing financial problems,'' said a corporate source. Financial institutions approved the sale of equity by the Torrent group.

The transaction will be funded from a combination of PowerGen's existing corporate facility and a local rupee facility, PowerGen said. "India has vast potential and today we see it as the largest market in the world for independent power projects. Our further investment in GTEC puts us in a strong position to grow as demand for power increases whilst generating a strong cash stream for futureinvestment," Ed Wallis, chairman of PowerGen, said in a statement.

Financial institutions had last month blocked the sale of the power company as the Torrent group defaulted on repayment of institutional loans. The Torrent group's financial woes were compounded by the roadblocks created by the Foreign Investment Promotion Board (FIPB) and financial institutions in the way of offloading the group's 40 per cent equity in GTEC in favour of PowerGen.

The deal is expected to pull out several of the Torrent group companies from financial wilderness. Delay in clearance of the transfer of equity was perceived as a setback to the group's revival and expansion plans, according to corporate observers here.

Torrent Gujarat Biotech Ltd, part of the Torrent group, had failed to redeem the first instalment of its Rs 70-crore non-convertible debenture (NCD) issue. It has also defaulted on interest payment to them. Further, as its net worth was wiped out as on March 31, 1999, the company referred the matter to the Boardfor Industrial & Financial Reconstruction (BIFR). The board registered Torrent Gujarat as a sick industrial undertaking on May 31 this year. As a result, all secured and unsecured liabilities of the company have been frozen.

Gujarat Lease & Finance Limited (GLFL), another Torrent group company, is in dire straits with the consortium of lender banks, led by the Bank of India, turning down its plea for waiver of interest on loans totalling a whopping Rs 157 crore and also shooting down its rehabilitation package.

GLFL, a non-banking finance company in the Torrent stable, had recently requested banks from which it had availed loans to waive off interest on Rs 157 crore worth of loans in view of its poor financial health. It may be mentioned that the banks have thus far sanctioned loans totalling Rs 190 crore to GLFL of which the maximum permissible bank finance (MPBF) stands at Rs 157 crore. Banks had categorically refused to waive off interest on loans.

Furthermore, the banks also shot down therehabilitation package prepared by the Torrent group through its lead bank, Bank of India. As per the rehabilitation plan worked out by the group, it had sought conversion of the loan of Rs 157 crore into a two part debenture, the first part of which would comprise Rs 85 crore debentures at 6 per cent rate of interest while the second part would comprise Rs 85 crore debenture at zero coupon rate.