Sumeet Industries bids come in lower than lenders’ expectations

Bids for textiles business Sumeet Industries have come in at significantly lower than the expectations of lenders to the debt-laden business. The textiles industry is facing high input costs and muted demand which has made the prospect of bidding less promising.

“Bids have been weak because raw material costs in textiles especially those linked to oil prices have gone up by about 15% in the last one year,” an anonymous source told ET Bureau. “At the same time, demand has not really picked up. All these have impacted margins for textile companies which has hit appetite for Sumeet.”
 
The value of bids received by banks have ranged from as low as Rs 90 crore to around Rs 150 crore, the Economic Times reported. These bids would only constitute around a 22% recovery of debt for lenders and are significantly lower than the 40% recovery banks had expected. 

However, the bids are initial offerings and there is over two months left of the bidding process with an extension option also available. Lenders thus have time to increase their bids and banks have time to negotiate with any serious bidders. 
 
Sumeet Industries’ total debt is Rs 667 crore which is owed to a number of lenders including Bank of Baroda, IDBI Bank, and Central Bank of India. The business was founded in 1988 and specialises in products including polyester texturised yarn, fully drawn yarn, and partially oriented yarn among others.