NRIs come to Malar’s rescue

The entire Rs 25 crore will go to retire the institutional and bank dues. Malar has also notified the consortium, in which ICICI is the lead institution, of the bail-out possibility. Malar obviously hopes there will be a waiver of around Rs 15 crore, which now seems adifficult proposition.

As of September 1997, the company owed Rs 40.03 crore to the four-member consortium comprising ICICI, IDBI, IFCI and Indian Bank. ICICI alone accounts for Rs 15.43 crore and the revival centres around this institution accepting the package. ICICI declined to comment, however, stating that it could not speak without consulting the other institutions. Sources at Malar said that ICICI had made an offer over a year ago and that the difference between the two proposals was only “a few crores”.

“We have made an offer of one-time settlement of dues,” Ramamurthy said and added that the consortium had yet to respond on how much they were willing to reduce interest dues now standing at a massive Rs 13.93 crore, more than the Rs 10.22 crore loss declared for the 18-month period ending September 30, 1997. Bank of India, with dues of Rs 8.03 crore, is however not part of this settlement.

While Ramamurthy said he was trying to raise the sum through a term loan, he was also “willing” topart with some equity for the purpose. He was however certain that he would maintain his stake in the company. The promoters now hold 65 per cent with Ramamurthy having the majority stake of this.

If the NRI rescuer wants an equity stake, the shares would have to come from the FIs and Indian Bank which currently hold around 10 per cent stake. "In fact," Ramamurthy said, “our proposal says that the consortium will have to part with the equity stake for the settlement.”

If, as sources indicated, the white knight is actually the NRI group currently part of the promoter group, Ramamurthy will have to opt for an equity issue or preference shares to retain his majority holding. “Let the interest burden be wiped out first,” he said, “then my balance sheet will look totally different.”