Mardia seeks one-time settlement with lenders

The Ahmedabad-based debt-ridden Mardia Chemicals has made an offer for a one-time settlement to its lenders. The company is now scouting for a buyer for its chemical units and is willing to give the proceeds of the sale to its 22 lenders.

Mardia Chemicals called a meeting of both its working capital and term loan lenders to discuss a proposal for a one-time settlement through the sale of its property, banking sources said.

The banks and institutions that attended the meeting on August 10, included, the Industrial Bank of India (IDBI), the Industrial Finance Corporation of India (IFCI), Bank of India, Bank of Baroda, UTI Bank, Union Bank of India, Corporation Bank and HSBC Bank.

When contacted Rasiklal Mardia, chairman & managing director, Mardia Chemicals, declined to comment on the matter.

The next meeting is to be called when a buyer is found. An executive at one of the lenders said, "We want a settlement as fast as possible, because chemical units are highly corrosive and will fetch little value once they deteriorate."

Mardia Chemicals Ltd, the flagship company of the Mardia group, owes over Rs 1,450 crore to 22 lenders, including ICICI Bank, Bank of Baroda, Bank of India, Corporation Bank, Union Bank of India, IDBI, Life Insurance Corporation of India, IFCI and New India Assurance.

The company had earlier challenged the Consititutional validity of the Securitisation Act at the Supreme Court, saying that the Act was biased in favour of the lenders after ICICI Bank slapped a notice on the company asking it to pay its dues.

The Supreme Court dismissed the company's petition but made the point that borrowers should not have to pay 75 per cent of the dues before appealing against the lenders at debt recover tribunals (DRTs).

Rasiklal Mardia has filed a writ petition in the Bombay High Court attempting to get an injunction against the seizure of Mardia's assets by the lead lender, ICICI Bank. The case was earlier dismissed by the DRT and the debt recovery appellate tribunal (DRAT).

The Bombay High Court receiver had attempted to take possession of several factories at Mardia Nagar (Surendranagar, Gujarat) about three months ago, but was unable to do so because of resistance by Mardia.

Even the public sector banks that are usually reluctant to take a "haircut" are now prepared to compromise on the accumulated interest as well as the principal amount in the case of Mardia Chemicals to achieve a quick settlement.

"When Mardia finds a buyer and submits a price the lenders will appoint an independent valuer and do a valuation. If the buyer is prepared to pay close to the valuation amount we will settle for it," said a bank official.