India's Axis Bank sues Scomi Group's Indian unit for loan default

-A +A

KUALA LUMPUR (Jan 18): India's Axis Bank Ltd has filed a lawsuit against Scomi Group Bhd's two subsidiaries, claiming 624.64 million rupees (RM36.15 million) for failing to pay the amount due to the bank.

Scomi Group said the default arose due to the failure by its indirect wholly-owned subsidiary Urban Transit Pte Ltd (UTPL) in India to pay the debt, while Scomi Engineering Bhd (SEB) had served as the guarantor. UTPL is a wholly-owned subsidiary of SEB, which in turn is wholly-owned by Scomi Group.

In a filing with Bursa Malaysia today, Scomi Group said UTPL and SEB have each received a notice of demand dated Jan 15, 2019 from Axis Bank.

"UTPL and SEB are still in the process of negotiating with Axis Bank.

"The default will give rise to an event of default by virtue of the cross-default provision under the financing documents in respect of a leasing facility amounting to RM1.29 million and an overdraft and foreign exchange contract facility granted to certain subsidiaries of Scomi Group," it added.

However, Scomi Group said it sees no business, financial nor operational impact of the default on the group as SEB and Urban Transit are not its major subsidiaries.  

The group also has no liability in respect of obligations incurred under the bank facilities as it is neither a borrower nor a security party.

Scomi Group shares closed up one sen or 20% at six sen today, with 15.05 million shares done, giving it a market capitalisation of RM57.61 million.