Defaulters rush for one-time settlement

Defaulting companies are making a beeline to banks and financial institutions for an one-time settlement of their dues.

Some of the companies which have offered an OTS include Parasrampuria Synthetics, JCT Electronics, Indian Charge Chrome Ltd and Modern Syntex.

Confirming this, an ICICI Bank official said out of the 16 companies that were served notices under the Securitsation Ordinance by the bank in July this year, ten had come forward for an OTS.

Other financial institutions also say that the list of companies seeking an OTS is getting longer everyday.

Under OTS scheme, banks and financial institutions are prepared to settle for a part of the principal.

"As provisioning has been done for these non-performing assets in the past, whatever you get goes straight to the bottomline and improves your liquidity," said a source with a financial institution.

Sources in Modern Syntex said that talks were on with banks and financial institutions for an OTS, though a final decision was yet to be taken. But banking industry sources said a settlement at 50 per cent of the principal was likely.

Indian Charge Chrome Ltd has informed the Industrial Development Bank of India, which had appointed a consultant to suggest a restructuring package for the company, that it would like to go in for an OTS as soon as it is able to find a strategic partner.

"Right now, given the current state of the economy, it is very difficult to find an investor. But we have informed IDBI that as soon as we are able to do it, say in another year or so, we would like to do an OTS," Indian Charge Chrome Ltd joint managing director Subhrakant Panda said.

JCT Electronics, a Man Mohan Thapar group company, too is working on an OTS of its dues with the foreign banks.

"With the domestic financial institutions and banks, we are working on a restructuring of the loans. But with the foreign banks, we want to do an OTS," JCT Electronics CEO Raj Kapoor said.

Out of the 17 banks which have an exposure to the company, as many as nine are foreign banks. "The foreign banks are more flexible in their approach," Kapoor added.