Reid & Taylor India Ltd, which once had superstar Amitabh Bachchan endorse the luxury clothing brand, is staring at the possibility of liquidation after eight bidders withdrew from the race to take over the financially stressed company.
The lone surviving bidder for Reid & Taylor India (RTIL), a subsidiary of S Kumars Nationwide Ltd, is Silver Point Luxembourg Platform SARL, USA (consortium partner of Probot Ventures). However, lenders have raised concerns on the earnestness of the bidder.
"This bidder came at the last moment. The CoC (committee of creditors) members expressed their concerns on the genuineness of the bidder," a source familiar with the development said.
In a presentation to the bankers on November 22, the resolution professional (RP) said that only Silver Point Luxembourg is still in the fray. DNA Money has a copy of the presentation made to the bankers.
"We had approached Raymond,Arvind, Reliance and Vardhman (Bhilwara). However, we have not received any expression of interest from the said parties," the presentation said.
The bidders who evinced initial interest, but later withdrew are UV ARC Ltd, ARCIL, Suraksha Asset Reconstruction, CAP Homestead Financial Holdings, Mauritius (The Carlyle Group), Finquest Financial Solutions, Invent ARC, Assets Care & Reconstruction Enterprise and Phoenix Arc.
Nitin Kasliwal, the erstwhile CEO of RTIL, has in a self-declaration to the RP, said that "he has not been part of any entity that was controlling Reid and Taylor Holding Ltd or Reid & Taylor International, directly or indirectly".
Bankers allege that the misfortunes that befell RTIL were directly related to the massive fund diversions from the company. KPMG, which is conducting a forensic audit, is expected to submit its report shortly.
The bidders were disappointed with RTIL's high debt and other liabilities. It was also not clear if the new buyer would have rights to the brand name. The validity of the licence to use and sell products under the brand name became uncertain after termination notice was received for the technical know-how licence in 2016.
The potential investors were also not certain how the dues towards the royalty of Rs 152 crore would be settled. There was also no clarity on whether or not the buyer of RTIL would get a chance to negotiate terms with the brand owners.
Reid & Taylor has a large factory in Mysuru, which until six months back was running at 30% capacity. The plant, which has 1,000 workers, is now on the verge of closure with the Karnataka State Electricity Board threatening to snap power supply if outstanding dues of Rs 1 crore are not paid by November 30, 2018, a source close to the development said. The workers who have not been paid their salaries are also planning to start an agitation for their dues.
Though a request of an interim finance of Rs five crore was put to the creditors, they have so far refused to part with any more money. The National Company Law Tribunal (NCLT) process is also costing the company dear, with about Rs 4 crore being given as the legal expenses and payments to the RP.
Another worry is the company's liabilities. While the company carries a debt of over Rs 4,000 crore on its books, it also has tax and statutory liabilities of Rs 300 crore. The liquidation value of the company is reported to be around Rs 150 crore.
Reid & Taylor was launched by S Kumar's Nationwide in India in 1998 to produce branded worsted and poly viscose suiting.
The tide began to turn against Kasliwal after he bought Hart Mart Schaffner (HMS), a high-end luxury brand that clothed former US president Barack Obama in 2008. It also coincided with the financial crisis when the market for luxury suiting shrank, thus adding to the financial woes of the company.
9 – No. of bidders Reid & Taylor India had
8 – Suitors, mostly asset reconstruction companies, withdrew their expression of interest
*Lack of clarity on the ownership of the brand cited as a major concern
Rs 4,000 cr – The company’s debt
Rs 300 cr – Tax and other liabilities
Nitin Kasliwal says he is not part of the promoter group
Bankers allege fund diversion
Appoint KPMG on August 7 to undertake a forensic audit
KPMG to submit its report soon