S Kumar's Nationwide is in the race to acquire Birla VXL's OCM business including the brand and three production units in Amritsar.
Two private equity funds and another domestic textiles company are also in the fray. The business carries a price tag of nearly Rs 200 crore (Rs 2 billion). The OCM division has the capacity to produce 8.4 million metres of suiting material per annum.
Sources close to the development said these buyers had got interested in OCM after the Asset Reconstruction Company India (Arcil) had put it on the block. The sources added that the sale was expected to be over by a month. Nitin Kasliwal, the managing director of S Kumar's Nationwide, was not available for comments.
According to sources, the representatives of S Kumar's had conducted a due diligence exercise of the plants and machinery of OCM. Other interested parties including a UK-based private equity player are yet to do so.
The sale proceeds would be utilised to pay off a substantial portion of Birla VXL's debt to financial institutions and banks. Arcil acquired the asset from other financial institutions.
The Bank of India and the Uco Bank have an exposure of Rs 63.23 crore (Rs 632.3 million) and Rs 25.89 crore (Rs 258.9 million), respectively, to OCM. Other lenders include the Union Bank of India, Punjab & Sind Bank, State Bank of Saurashtra and the Bank of Baroda.
Arcil had earlier sold Saurashtra Chemicals, another company of the Kolkata-based S K Birla group, to the Nirma group in June.
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