The Hindu Business Line : Mardia Chem case referred to fraud investigation office

According to sources, "There are allegations of diversion of funds against the company. Besides, the company has not been responding to the notices severed by the Registrar of Companies, Ahmedabad."

Mardia Chemicals had bought property worth Rs 34 crore and converted them into company guest-houses, but there is no information available on the source of funds, official sources told Business Line. Also, with ICICI taking recourse under the Securitisation Act, the Ministry had to conduct a detailed investigation on the company, sources said.

The company's brush with the law began in 2002. The Mardia issue is the among the first cases to be taken up under the Securitisation Act and is the first to be relieved from the Board for Industrial and Financial Reconstruction, as the financial institutions had initiated proceedings under the Securitisation Act.

In May 2004, a court-appointed receiver started taking possession of the inventory and the company's factories.

A Rs 1,000-crore company, Mardia Chemicals is the flagship of the Mardia Group, which owed over Rs 700 crore to the financial institutions.

The group has facilities to manufacture a range of products including dyes, dye intermediates, basic chemicals and caustic soda. It owes over Rs 1,450 crore (including a principal of Rs 800 crore and unpaid interest forming the balance) to 22 lenders, including Bank of Baroda, Bank of India, Corporation Bank, Union Bank, IDBI, Life Insurance Corporation, IFCI and New India Assurance.

The exposure of ICICI Bank to the Ahmedabad-based dyes and dyes intermediaries company is Rs 110 crore (principal) and with interest works out to Rs 392 crore.

In November 2003, ICICI Bank took over a unit of Mardia Chemicals, located at Vatwa in Ahmedabad, but got stuck in legal proceedings as the right to sell seized assets came into question till the Supreme Court upheld the constitutional validity of the Securitisation Act in April 2004.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page