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SM Dyechem''s glycol unit seized by IDBInews
19 October 2004

Mumbai: IDBI Ltd has attached the assets of SM Dyechem's glycol plant near Pune — which has accumulated losses of Rs378.02 crore for the fiscal 2004 — for defaulting on loan repayments under the Securitisation Act.

In a notice to the Bombay Stock Exchange, the company, promoted by S M Shetty, said ''IDBI has taken possession of assets of the glycol divison in Pune last Saturday under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002''.

Dalal Consultants and Engineers, consultants and architects, carried out an inspection at the instance of IDBI and in May 2001 valued the plant at Rs112 crore with a distress sale value of Rs91 crore. The net book value of these assets, as per the company, was as high Rs 413 crore.

SM Dyechem's glycol unit had an interest liability of Rs349 crore for the fiscal 2004 and another Rs1,725 crore was the accumulated interest liability as on March 2004.

S M Dyechem, makers of snack foods, was planning to sell off its non functional Glycol plant to raise funds for its revival. The glycol unit of the plant was closed for the last eight years.

Though the company had sought some waivers from BIFR seeking interest concessions, the latter had rejected it.

IDBI, along with a host of other FIs, has an exposure of Rs611 crore in the company, which has been referred to the BIFR as the company completely eroded its net worth. BIFR has even referred the company for winding up but the management has appealed against it to the Appellate Authority of Industrial and Financial Reconstruction (AAIFR).

Since IDBI converted itself into a bank, it has taken several steps to cut its bad loans. While a majority of its bad loans worth Rs12,000 crore have been transferred to a special purpose vehicle, IDBI has kept some bad loans in its books.

The company made a loss of Rs57 crore for the fiscal 2004 on sales of Rs147 crore. According to its auditors, its losses were higher at Rs429 crore as against the reported figure of Rs 57 crore. The accumulated losses would have been Rs2,222.9 crore as against the reported figure of Rs426 crore.

According to the company's auditors, S K Kavathekar & Co, the company has defaulted on loans of Rs55 crore to debenture holders since 1995 and term loans of Rs531 crore since 1993. Working capital loans worth Rs79.9 crore remained unpaid since 1998.

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SM Dyechem''s glycol unit seized by IDBI