FE: BoB-led consortium puts Rs 2,311 crore Garden Mills loan up for sale

15 March 2019: A consortium of lenders led by Bank of Baroda (BoB) has put on sale their exposure to Garden Silk Mills on a 100% cash basis, according to a bid document. As on February 21, the company owed Rs 2,311 crore to banks. All bank facilities of the textile manufacturer are in the default category.

“The highest bid may be further negotiated with the bidder. The lenders will have right for inter-se bidding/ Swiss challenge/ e-auction between the bidders,” the document said.

The Surat-based textile company is promoted by chairman and managing director Praful A Shah, joint managing director Alok P Shah, and executive directors Sanjay S Shah and Suhail P Shah.

According to Garden Silk’s annual report for 2017-18, the other lenders to the company are Allahabad Bank, Bank of India, Corporation Bank, Exim Bank, ICICI Bank, IDBI Bank, Indian Bank, Indian Overseas Bank, State Bank of India, Union Bank of India, and Life Insurance Corporation (LIC) of India.

According to the bid document, Garden Silk Mills is a vertically integrated company operating in the man-made textile space that manufactures polyester chips, polyester filament yarn (PFY), preparatory yarn, woven (grey) cloth as well as dyed and printed sarees and dress materials. The manufacturing units of the company are located in Vareli (weaving) and Jolwa (manufacturing unit of chips and yarn) villages near Surat.

Bad-loan accounts put up for sale by banks so far in the March quarter have risen to over Rs 27,700 crore as lenders rush to make cash recoveries before the end of the financial year 2018-19. In their anxiety to close out deals, they have been willing to take fairly large haircuts, executives at asset reconstruction companies (ARCs) say.

Banks are demanding 100% cash payments through ARC sales to try and ensure their provisioning burden does not go up. “We are selling NCLT exposures in cases where we get cash,” an executive with a mid-sized public-sector bank (PSB) said. “We are making it clear to buyers that we want the cash in 60 days,” he added.

The Financial Express reported

Categories: General News, India Bankruptcy

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