Raymond Scripts Plan On Outstanding Liabilities

The Vijaypat Singhania-controlled Raymond Ltd is readying a restructuring plan which envisages deferment of payment of its outstanding liabilities which amount to over Rs 300 crore in order to tide over the liquidity crunch being faced by the company. Raymond has already held discussions with its lead banker, ICICI, and IDBI, among others, and the formal restructuring proposal will be submitted by the end of this month.

The company is already facing a liquidity crunch with the first-quarter results showing Rs 13 crore net loss. Though sources say that the first-quarter traditionally shows lower profit for textile companies, Raymond's profit could suffer a squeeze due to its non-performing steel division.

 

The restructuring plan hinges crucially on the sale of its steel division which has been incurring losses for the past two years.

The company had earlier entered into negotiations with Thyssen - the German major - to form a joint venture company by hiving off the steel division.

The talks had fallen through following disagreement between the two parties regarding the terms of the sell-off.

Raymond has resumed fresh talks with Thyssen for the sale of its steel division.

The steel division, which is said to be incurring losses to the tune of Rs 12 crore per month, is to be spun off as a separate company in which the Singhanias will hold minority equity share. The restructuring of its debt-repayment has been prompted by the severe liquidity crunch which the company has been facing for sometime now. Out of the three divisions in Raymond Ltd, only the textile division is running profitably and the steel and cement divisions are not contributing any earnings to the company. Since the interest cost of the new plants are loaded on to Raymond's profit and loss account, the company's net profit is likely to decline in 1998-99 compared to Rs 48 crore net profit recorded this year (1997-98).

Raymond will have to repay Rs 75 crore by way of debentures and about Rs 125 crore on the loans taken for its new projects during the next two years.

Besides, it had also stood guarantee to a large portion of Raymond Synthetics Ltd's debt, and has been advancing inter corporate deposits to Raymond Synthetics to enable it to meet the commitments to various financial institutions. Raymond Synthetics Ltd, the other group company, is also facing trouble with the net loss mounting to Rs 33 crore during 1997-98. The company is slated to make further losses this year following the depressed market conditions faced by the polyester industry.