Selling assets a way out

The Bombay High Court has asked Baroda Rayon Corporation to sell some of its assets to raise the money to pay off liabilities owed to the Industrial Credit and Investment Corporation of India. There are two kinds of assets that can be sold. One is some of the company''s real estate, in Surat and in Mumbai. The other is the company''s viscose filament yarn plant.

The problem is that the management of Baroda Rayon is not getting the price it wants from either. It is unable to find buyers for its 150-acre property in Surat at the price it expects. And talks with Aditya Birla group company Indian Rayon for the sale of the viscose rayon plant have come to nought. While the Baroda Rayon management wants a price of Rs 100 crore, Indian Rayon is reportedly willing to pay not more than Rs 40-50 crore for the plant.

Baroda Rayon is in a fix. Its production capacity is too small to compete in today''s market. On the other hand, given the near-monopoly position that the Aditya Birla group enjoys in the viscose rayon business, Baroda Rayon has little bargaining strength to extract a good price for the plant sale.

Earlier Baroda Rayon had sounded out Reliance Industries for the takeover of the ailing company''s polyster oriented yarn plant in Surat. Reliance has decided not to purchase it. The plant, with a capacity of 15,000 tonnes per annum, is too small to be viable.

In the meantime, ICICI is not willing to wait. The court has given Baroda Rayon 31 January as a deadline to pay off ICICI''s dues of about Rs 34 crore.

Matters have become complicated with ICICI contesting in court the sale of Baroda Rayon''s property at Hoechst House at Nariman Point in Mumbai to Infrastructure Leasing and Financial Services Ltd to pay dues to IL&FS.