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Foreign lenders recall loans to Birla VXL

Calcutta, June 9: Some of the foreign lenders have recalled their loans to Birla VXL Ltd. The S.K. Birla company has an accumulated loss of over Rs 200 crore. The company is deep in debts and has even had to mortgage its flagship brands, OCM and Digjam, in addition to some of its tangible assets.

Some of the overseas lenders have been trying to persuade Birla VXL to prepay the loans since last year, despite guarantees from ICICI Bank and IFCI. Birla VXL says it has never failed in servicing these loans.

Last year, ICICI Bank and IFCI had sought Reserve Bankís approval for repayment of the loans ahead of schedule, but the apex bank turned down the request of the overseas lenders.

However, the RBI has now given its consent to the repayment of these external loans, and ICICI Bank recently repaid a part of the loans guaranteed by it. IFCI has also sought RBIís approval to repay overseas loans guaranteed by it.

ICICI Bank and IFCI have together guaranteed loans amounting to around Rs 90 crore. Birla VXL is indebted to IFCI, ICICI Bank, Industrial Development Bank of India (IDBI), Bank of India, UCO Bank and State Bank of Saurashtra, among others. To secure loans from these lenders, Birla VXL has had to mortgage some of its investments, even in key group companies like Mysore Cements and Saurashtra Chemicals.

Birla VXL holds a little over 78.4 lakh shares of Mysore Cements, which represents about 11.4 per cent of the latter's equity capital. Birla VXL also holds 1.17 lakh shares of Saurashtra Chemicals. Besides these shares, Birla VXL has had to mortgage its 11.1 lakh shares in Cimmco Birla (or about 8 per cent of the latter's equity capital), 2 crore shares of VXL Technologies, 30 lakh shares of Masuzawa Punjab Silk, 2.81 lakh shares of Janardhan Trading Company, among others.

VXL Technologies and Masuzawa Punjab Silk are subsidiaries of Birla VXL. Janardhan Trading Company is an investment arm of the group, which holds 4.55 per cent in Mysore Cements, and about 3 per cent in Cimmco Birla.

The aggregate value of investments that the company cannot alienate and has mortgaged with banks and financial institutions is Rs 124 crore, says Birla VXL's balancesheet for the year 2002-03.

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