Orkay comes under liquidation

The High Court directive follows the winding up petition filed by the Maharashtra State Financial Corporation MSFC for recovery of dues to the tune of Rs 26 crore from Orkay. BSE has filed another winding up petition against the company for non-payment of listing fee for the last three years. The company was facing a tough time in paying back to its creditors. Orkay had planned to sell its fibre plant in Patalganga to the JVG group, but the deal wascalled off as the latter could not arrange funds for acquisition of the plant. The JVG group itself came under problems with its flagship firm JVG Finance coming under the Reserve Bank8217;s scrutiny. Besides, another JVG firm was forced to cancel its public issue by the Securities and Exchange Board of India SEBI.

As per the current laws, the liquidator will value the assets of the company and auction it for repayment to creditors. Orkay has taken secured loans of Rs 125.57 crore and unsecured loans of Rs 40.10 crore from banks and financial institutions. The company, managed by Kapal and Jitendra Mehra, was finding it tough to manage the accounts in the last two years. It last finalised the accounts for the year ended March 1995 when it registered a total income of Rs 312.11 crore and a net profit of Rs 12.55 crore. Although the company announced 11 per cent dividend for the year, it could not pay the amount to investors due to financial crunch.

Orkay, which was set up in 1968, went public in 1983 with anissue of Rs 16.15 crore. The equity capital of the company went up later after several rights issues and debenture conversions. After the first public issue, the company8217;s share price had crossed the Rs 200 mark in the late eighties. The Orkay scrip closed at Rs 3.50 on the BSE on Tuesday. 8220;It was a widely traded share with a prime place in the A group of the Bombay Stock Exchange,8221; said a broker. Primarily engaged in the production of polyester chips, polyester filament and texturised yarn and fabrics, the company was struggling to expand its business. It tried to take on the might of the Reliance in the fibre business but was left way behind by its rival. The group also unsuccessfully diversified into the pharmaceutical business which was closed down later. The company negotiated with several parties for sale of its Patalganga plant but could not succeed due to huge liabilities of the company.