SM Dyechem’s glycol unit seized by IDBI

IDBI Ltd has attached the Pune assets of SM Dyechem — which has accumulated losses of Rs 378.02 crore for the fiscal 2004 — for de...

IDBI Ltd has attached the Pune assets of SM Dyechem — which has accumulated losses of Rs 378.02 crore for the fiscal 2004 — for defaulting on loan repayments under the Securitisation Act.

In a notice to the Bombay Stock Exchange, the company, promoted by S.M. Shetty, said ‘‘IDBI has taken possession of its assets of the glycol divison in Pune last Saturday under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’’.

Dalal Consultants and Engineers, consultants and architects, carried out an inspection

at the instance of IDBI and in May 2001 valued the plant at Rs 112 crore and distress sale value of Rs 91 crore. The net book value of these assets, as per the company, was as high Rs 413 crore.

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SM Dyechem’s glycol unit had an interest liability of Rs 349 crore for the fiscal 2004 and another Rs 1,725 crore was the accumulated interest liability as on March 2004.

S M Dyechem, makers of snack foods, was planning to sell off its non functional Glycol plant to raise funds for its revival. The glycol unit of the plant was closed for the last eight years.

Though the company had sought some waivers from BIFR seeking interest concessions, the latter had rejected it.

	DEEP IN THE RED

			• Accumulated losses: Rs 429 cr • Loss as per auditor: Rs 2,222 cr • Interest dues of glycol unit: Rs 1,725 cr • Total borrowings: Rs 784 cr

IDBI along with a host of other FIs have an exposure of Rs 611 crore in the company which has been referred to the BIFR as the company completely eroded its net worth. BIFR has even referred the company to be wound up but the management has appealed to the Appellate Authority of Industrial and Financial Reconstruction (AAIFR).

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Since IDBI converted itself into a bank it has taken several steps to cut its bad loans. While a majority of its bad loans worth Rs 12,000 crore have been transferred to a special purpose vehicle, IDBI has kept some bad loans in its books.

The company made a loss of Rs 57 crore for the fiscal 2004 on sales of Rs 147 crore. According to its auditors, its losses were higher at Rs 429 crore as against the reported figure of Rs 57 crore. The accumulated losses would have been Rs 2222.9 crore as against the reported figure of Rs 426 crore.

According to the co mpany’s auditors S.K. Kavathekar & Co, the company has defaulted on loans of Rs 55 crore to debenture holders since 1995 and term loans of Rs 531 crore since 1993. Working capital loans worth Rs 79.9 crore remained unpaid since 1998.