The hiving off of a strategic real estate subsidiary from KSL & Industries (KSL), the listed flagship of the Tayal group, and the resignation of its chairman, have put lenders of the textile-cum-real estate group in a spot of bother.
KSL has said Reward Real Estate, which held key real estate assets of the group in 15 centres, ceased to be its subsidiary last year. KSL is owned by the family of Pravin Kumar Tayal, promoter of the erstwhile Bank of Rajasthan. His son, Saurabh Kumar Tayal, who headed KSL as chairman, recently resigned from the board of directors.
The twin moves have come as a blow to lenders because term loans and working capital loans made to the firm were covered by a charge over its fixed assets and backed by a personal guarantee from Saurabh Tayal. “Reward Real estate was a key asset of KSL and its hiving off by just making a footnote to the accounts is shocking,” said a lenders. An email sent to Saurabh seeking comments did not elicit any response.
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- Reward Real Estate ceases to be a 100% subsidiary of KSL
- Reward holds KSL’s key realty projects in 15 centres
- Saurabh Tayal, chairman of KSL & Industries, resigns from the board
- Saurabh had given personal guarantees to lenders
- Lenders left with little option but to restructure
In its annual report, KSL said: “During the year, Reward Real Estate, a wholly owned subsidiary, has ceased to be the subsidiary. Accordingly, (its) financial statements are not included in the consolidated figures for the year ended March 31, 2012.” For 2011-12, KSL made a loss of Rs 92 crore, on revenue of Rs 1,400 crore. The annual report, along with the audited accounts, was approved by the shareholders at the annual general meeting on Saturday. The shareholders also approved the appointment of Manoj Kumar Sharma as managing director of company.
A consortium of 15 banks including Punjab National Bank, Union Bank of India and UCO Bank is considering a corporate debt restructuring (CDR) programme. “The real estate arm of KSL and its holdings were what gave comfort to the lenders, as the textile business was struggling,” said a bond holder.
Several entities of the Tayal group together owe around Rs 2,800 crore to the consortium. Of this, around Rs 700 crore is owed by KSL alone. KSL also has defaulted on foreign currency convertible bonds worth Rs 500 crore, which were due in May. These bondholders have moved court, seeking winding up of the company. KSL shares gained 0.2 per cent to close at Rs 59.50 on Monday. Despite the developments, the company’s website still calls KSL as the “flagship of Saurabh Tayal Enterprise.” and, Reward Real Estate Company as “our 100% subsidiary” which has projects in Maharashtra, Punjab and Dadra & Nagar Haveli.” Lenders are hoping the CDR will work. “We have received a letter saying that he (Saurabh) wanted to resign. We have not agreed. As a lender, our interest is not in stepping into the shoes of the promoter at the first opportunity. We will try and keep the account live and will consider their CDR application,” said a bank official.