Reliance, MCPI among 8 in race for textile manufacturer Sumeet Industries

Reliance Industries, India's largest private sector company by revenue, and Kolkata-based MCPI are among eight companies that have expressed interest to take over debt-laden textile manufacturer Sumeet Industries, documents accessed by ET showed.

These companies have officially submitted their interest along with supporting documents earlier this month and will be now scrutinised by the resolution professional before calling for formal bids for the company.

The Surat-based yarn and polyester maker Sumeet owes lenders and operational creditors led by the Bank of Baroda (BoB) a total of ₹667 crore. The company was admitted to the bankruptcy court in December last year after a failed attempt to restructure its loans.


BoB is the largest creditor to the company with 65% of dues to financial creditors, followed by IDBI Bank, which corners 21% of dues. Other lenders to the company are Central Bank of India, Canara Bank, Union Bank of India and Germany-based Oldenburgische Landesbank AG.

"This company has been in trouble for the last couple of years and had also tried to restructure its loans. Even the mandatory RP4 credit rating was received based on which a restructuring plan was proposed. However, banks could not agree on the details of the plan so this company was taken to the bankruptcy court," said a person familiar with the developments.

Resolution plans with an opinion or rating of RP4 are considered to have a moderate degree of safety regarding the timely servicing of financial obligations.

"The restructuring plan offered by the company envisaged a recovery of 45% on the gross outstanding dues but it was spread over a period of five years, which was not acceptable to banks. Subsequently, a large public sector bank also agreed to a one-time settlement with the promoters but some other banks were determined to get more. Hence this process was started," said a second person aware of the situation.

The interest from Reliance Industries and MCPI has raised lenders' expectations from the resolution.

Other interested bidders include UP-based Bhola Ram Papers & Power, Mumbai-based Bhilosa Industries and Bhumi Tex Industries, and Gujarat-based Eagle Group and Geelon Industries.

Diamond trader Chunibhai Gajera has also expressed interest in the debt-laden company.

Reliance, MCPI and Bhilosa Industries did not reply to an email seeking comment. Other bidders could not be immediately contacted. Resolution professional Satyendra Khorania also did not respond to an email seeking comment.

Sumeet posted a loss of ₹25 crore in the quarter ended December 2022 despite a rise in revenues as expenses remained elevated. The company's shares ended at ₹2.68 a piece on Wednesday.

Sumeet's purified terephthalic acid (PTA) capacity is an attractive proposition for companies like Reliance and MCPI, which were losing bidders to take over JBF Petrochemicals last year. PTA is used to make polyester value chain products used in consumer goods, textile and packaging industries.