The Hindu Business Line : Banks' `rigid' stand delays TRL revival

The company had borrowed Rs 9 crore from four banks about 16 years ago and it had repaid Rs 36 crore so far. Yet the outstanding amount is Rs 36 crore. All the money paid were adjusted against interest, penal interest etc. Consortium against OTS proposal

Kochi , April 6

The stalemate over the re-opening the Travancore Rayons Ltd (TRL) at nearby Perumbavoor continues even 20 months after the promoter and the State Government had signed an agreement, as the promoters could not reach a one-time settlement (OTS) with the banks because of the `non-flexible' attitude of the latter.

The promoters, the Coimbatore-based NDEE group, had already arrived at an OTS with IDBI and on similar lines it had given a proposal to the consortium of Indian Bank, Bank of India, State Bank of Travancore and Canara Bank. But, two of the four banks involved have not agreed to the proposal.

"Their non-flexible stand has blocked the re-opening of the company," Mr N. Damodaran, Managing Director of the group, told Business Line.

He said the company had borrowed Rs 9 crore from four banks about 16 years ago and it had repaid Rs 36 crore so far. Yet the outstanding amount is Rs 36 crore. All the money paid were adjusted against interest, penal interest etc, he said.

"We have proposed to the bank that on the similar formula they had followed for the OTS with the IDBI, we would pay 10 per cent of the total outstanding amount for settling the account," he said. Mr Damodaran said he would be meeting the Chairman of Indian Bank soon to sort it out.

The consortium sources, however, said the banks were examining the proposal.

According to the promoter, the Trade Unions have agreed in principle to accept the terms and conditions proposed by the management for a long-term settlement. "The moment the OTS is completed we would conclude an agreement with the TUs," he said.

After getting the High Court's approval the management would invest Rs 210 crore for the re-opening of the unit. Of this, Rs 70 crore would be from the promoters and the balance from the financial institutions, he said.

The State Government had signed an agreement with NDEE Group in July 2004 for reviving the unit. As per the agreement, all the loan liabilities including those taken by the company under government guarantee would be taken over by the promoters and would be settled through OTS. Similarly all the dues to the State Government and government agencies would also be settled.

Government concessions and benefits would include permission to pay the electricity charges and sales tax in instalments and assistance and cooperation for setting up of new hydroelectric projects, according to official sources.

The rehabilitation proposal envisages that the promoter would invest Rs 530 crore spread over a period of five years for modernisation of the company, they said.

The BIFR had ordered the closure of the sick unit in 2002. It was at this juncture the new promoter came forward with a revival package and while it was under the consideration of the State Government, the Kerala High Court stayed the closure of the unit.

The company is under lay-off for over two years now and about 1,200 workers are without wages. At present, the unit is maintained by a skeleton staff of 70 people on a monthly wages of Rs 750.

More Stories on : Sick Units | Non-Performing Assets | Kerala | Textiles

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