Parag bankruptcy buzz rattles trade

Rumours of Parag Industries, a leading sari and dress material manufacturer, going bankrupt shook the textiles industry here on Thursday. Creditors rushing to Parag House, the corporate headquarters of the company, to recover their outstandings.

A leading vernacular daily had reported that Parag was going deep into the red with debt of over Rs 175 crore.

Charanjeet Virmani, managing director of Parag Industries Ltd, rubbished the claims, saying the company had no outstandings. "Why do you believe such rumours. On the contrary, we have added a few feathers to the cap of the Surat textile industry by manufacturing fine quality saris and dress material."

Merchants and traders who supplied grey fabrics, chemicals and other raw materials to Parag were, however, not convinced by Virmani's assurance.

Throughout Thursday and Friday, meetings were held at Parag House as eager suppliers thronged the office to know the exact status.

"This has definitely come as a shock to the industry which is passing through a tough period. We have not yet come out of the shock of Kunwar Ajay," Mahendra Saluja, president of Surat Textile Traders Association, said.

The industry had already lost several crores of rupees a couple of months back when another textiles major Kunwar Ajay had allegedly gone bankrupt.

Meanwhile, it is learnt that Parag cleared all its debts to chemical suppliers by late Thursday evening.

The Parag brand of saris and dress materials was built up in the mid-nineties by the Virmani brothers - Harish and Charanjeet. Before coming to Surat to set up manufacturing facilities, the Virmani brothers were dealers of Garden in Gwalior.

The brothers capitalised on the boom of the private TV network in the nineties by aggressively marketing their saris and dress materials on TV.

Since the past two years, there have been rumours of tensions between the two brothers and that they had parted ways.

But so far no official confirmation is available. Industry sources said that while Harish Virmani had taken the Parag brand, Charanjeet had opted for the Riva brand.