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Court liquidator may seal Raveendra Mills on July 13

G. Gurumurthy

COIMBATORE, July 11

COIMBATORE-based RAVEENDRA Mills, the sick textile unit which is facing the Madras High Court decree to put on sale the mill's properties to pay-off its creditors, is on the verge of being sealed by the official liquidator of the court.

The management has time till July 13 as the execution of the High Court order was delayed due to the intervention by the mill's workers who prevented the HC official and the creditors from executing the court directive of sealing the unit last weekend.

Simultaneously, the mill employees, through their trade union leaders, approached the High Court and obtained postponement of court action by a week so as to give the promoters of the mill an opportunity to work out some arrangement towards clearing the dues, the trade union sources said.

According to sources, the High Court has given the promoters time till this July 13 to evolve some package for repayment of loans to creditors, primarily financial institutions and banks.

Sources said that the mill management has mounting dues by way of outstanding term and working capital loans including accumulated interests on loans availed from IDBI, IIBI and Bank of Baroda running into several crores besides dues payable to workers s uch as gratuity, PF, ESI. Among the institutional loans outstanding, the dues payable by the mill management to the Bank of Baroda (towards both working capital and term loans) alone are said to be close to Rs 5 crore.

Though the HC has issued orders asking the official liquidators to take charge of the unit including the plant and machinery by sealing the unit, it has however allowed the unit to continue to operate following representations from the workers that putti ng the unit under locks would deprive them of jobs.

This is because the 25,000 spindle unit is at present run on lease as the original promoters in the aftermath of financial difficulties gave the unit for job work.

An Andhra Pradesh-based business group which took the unit a year ago for lease is operating the unit on `conversion basis'. The lessees are said to be giving continuous employment for the workers since then.

The employees are crest-fallen as neither the original promoters nor the lessee took any urgent measures to tide over the current crisis or settle the dues to the creditors. None of the management representatives nor the lessees were available for commen ts on the latest development involving the unit.

Raveendra Mills, incorporated in 1955, ran into financial problems and was declared a sick unit by the Board for Industrial and Financial Reconstruction (BIFR) sometime in 1994 and the board also ordered the winding up of the unit in 1996. The promoters then appealed to the AAIFR. When their appeal failed, the company took the issue to the High Court which dismissed the case and appointed a liquidator early this year to carry out the sale of the unit and settle the creditors dues.

According to sources, when the official liquidator first went to take possession of Raveendra Mills' Singanallur plant on June 19 last, the mill management obtained a stay from the HC against the court receiver's action on the promise that it would make part-payment of dues.

However, when the management failed in its promise the court vacated the stay and allowed the official liquidator to take possession of the mills's factory on July 5, when the workers stalled the proceedings of the court liquidator.

Though the unit is operating, none of the goods including the finished manufactured goods are allowed to be taken out of the mill premises. The mill-workers caught between the court dictate and the mill management/lessee are unaware of what will happen t o them beyond Friday, when the extended deadline set by the HC expires.