ICICI Bank on Monday issued a notice to JK Udaipur Udyog (JKUUL), part of the Delhi based JK Group headed by Hari Shankar Singhania, under the new Securitisation Bill.
JKUUL has an outstanding of Rs 70 crore to ICICI Bank and Rs 52 crore to other banks and institutions, including UTI, LIC, Central Bank of India, State Bank of India and IDBI. The company had taken loans from the bank for its cement plant at Udaipur.
The term lenders to the company had restructured the loans in January 2001 with the specific condition that the cement business of the JK group would be consolidated in JK Corp Ltd. Lakshmi Cement, the cement brand of JK Corp, has a 2 million tpa while JKUUL has a one million tpa capacity. JK Corp is a profitable company and, according to the lenders, the promoters have decided to renege on their commitment to save JK Corp.
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According to the terms of the restructuring of JKUUL, the interest charges were deferred for two years and the rates were reduced in the initial years to 5-6 per cent which would have ballooned to around 16 per cent. The repayment was scheduled over a span of eight to nine years.
Incidentally, institutions had also restructured the loans of JK Corp in December 2000. JK Corp has an exposure of around Rs 700 crore. Also the institutions had restructured the loans of another group company JK Paper in December 2000.
According to the lenders, after the restructuring the company had stopped making payments from December 2001 and the plants have been closed since March 2002.
ICICI Bank had sent notices to around 30 companies under the new bill for loans of around Rs 2500 crore.