Ashima to seek nod for debt recast

Gujarat High Court had directed the company to call a meeting of its creditors on Dec 15

In an attempt to ease its debt burden, the Ahmedabad-based textile major Ashima Ltd will seek the approval of its creditors for a financial restructuring plan at a December 15 meeting.

In October the Gujarat High Court had directed the company to call a meeting of its creditors on December 15.

The company had sought the high court's approval for a scheme of compromise and arrangement with its shareholders and creditors.

"The company has decided to call a meeting of its secured term creditors, secured working capital creditors, unsecured creditors and priority creditors on December 15," said B Ravi, vice-president, corporate finance and company secretary, Ashima Group.

The company's financials have been deteriorating, with interest costs staging a sharp rise in the past few years. Ashima had merged sick textile mill Ahmedabad New Cotton Mills with it in 2001.

The company posted a net loss of over Rs 23 crore on net sales of Rs 116.94 crore in the third quarter of its current financial year ending on September 30.

"The company is restructuring its finances in an attempt to ease its debt burden. We have evolved a long-term strategy aimed at strengthening our position in the post-quota era that will come into force by the end of this month. Towards this, we are increasingly looking at the global market for our products. At present over 30 per cent of the Rs 430 crore turnover of the company comes from exports. The company is eyeing 70 per cent of its turnover from exports in the post-quota regime," said Ravi.

The company is planning to offer packaged solutions to its customers, and will be targeting on readymade garments to its existing and new customers.

Recently a team of experts from global major Wal-Mart visited Ashima's facilities in Ahmedabad. The company hopes to get high-value orders from Wal-Mart in the next fiscal year.

Promoters hold a 44.87 per cent stake in the company, mutual funds and Unit Trust of India hold a 0.24 per cent stake, banks, financial institutions, insurance companies, Central and state governments and non-government institutions hold 2.94 per cent stake in the company.