The Supreme Court has stayed the proceedings of the Board for Industrial and Financial Reconstruction (BIFR) dealing with the Parasrampuria Synthetics case in a special leave petition filed by Industrial Credit and Investment Corporation of India (ICICI).
Passing the interim order, the Supreme Court has said that Industrial Development Bank of India will file a status of the Parasrampuria Synthetics account with in three weeks.
Since the case was with the BIFR, the interests of the Industrial Credit and Investment Corporation of India were badly affected.
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ICICI had earlier filed a case in the Delhi High Court challenging the company's 1996-97 balance sheet which was for a 15 month period.
The financial institution had stated that Parasrampuria Synthetics had changed the accounting policy to take shelter under the BIFR.
ICICI had earlier also filed a case against the company on the issue of receivership.
However, now with the Supreme Court setting a schedule for the Industrial Development Bank of India to file the status of the company's account, the whole time-table of the Parasrampuria Synthetics case has been shortened considerably.
Sources also feel that the order by the supreme court is exemplary and might prevent other companies for taking shelter under the BIFR.
It was reported that the company's board of directors planned to move BIFR in the wake of a massive liability of Rs 700 crore. Parasrampura's debt with banks and financial institutions is estimated to be over Rs 500 crore.
The reason for the financial mess of the company is reportedly the Rs 535 crore expansion programme that it undertook along with the depressed synthetic fibre market. The company has debts to the tune of Rs 380 crore from financial institutions and Rs 160 crore from banks.
Parasrampuria Synthetics got into further trouble due an increased leverage by borrowing Rs 35 crore as a working capital loan. To top it all, its Rs 100 crore public issue also flopped.
Some time back, the company had also expressed the intention to sell off some of its divisions in order to reduce its liabilities.
The Silvassa unit of the company, which was non-operational, was reportedly on the block. The unit has a capacity of 16800 tonne per annum of polyester yarn, 78760 tonne per of polyester chips and 26250 tonne per annum of polyester staple fibre.
The sale of the Silvassa was expected to fetch approximately Rs 160 crore. The company has also envisaged sale of its two export oriented units namely the cotton spinning division at Pithampur near Indore in Madhya Pradesh and its terry towel division at Kushkhera.