Financial Daily from THE HINDU group of publications
Thursday, Apr 11, 2002
Financial Daily from THE HINDU group of publications Thursday, Apr 11, 2002 |
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Industry & Economy
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Disinvestment Corporate - Sick Units Operating agency clears Jessop revamp package P. Manoj
NEW DELHI, April 10 STATE Bank of India, the operating agency appointed by the Board of Industrial and Financial Reconstruction (BIFR), has cleared the package submitted by the Union Government to revive the ailing Jessop & Co, including the induction of Ruia Cotex as strategic partner holding 72 per cent stake. "The operating agency has categorically approved the Union Government's package to revive Jessop & Co mainly through the induction of a private partner," Government sources said. BIFR had asked SBI to evaluate the package submitted by the Union Government and submit its report before taking up the case for hearing. SBI's endorsement of the revival package forwarded by the Union Government is expected to make the task of BIFR easier. "With the operating agency clearing the sale of 72 per cent equity in Jessop & Co to Ruia Cotex along with a financial restructuring plan submitted by the Government, BIFR is now expected to fix an early date for hearing the case," the sources said. BIFR was earlier slated to hear the case of Jessop & Co on April 30. The Cabinet Committee on Disinvestment (CCD) had, on February 27, approved the sale of a controlling stake of 72 per cent equity in Jessop & Co to Ruia Cotex for a consideration of Rs 18.18 crore. Besides, the CCD had also cleared a financial restructuring package which involved financial support of Rs 63 crore and non-fund support of Rs 140 crore on account of converting Government loans into equity and write off/waiver of interest and penal interest. The cash support of Rs 63 crore would be utilised by the company for discharging outstanding bank loans on concessional terms. The financial restructuring plan was cleared on the condition that it would be implemented only upon successful privatisation of Jessop & Co. Further, the CCD had decided to extend purchase price preference to Jessop & Co for two years after privatisation. This will be in the form of orders for building 36 EMU coaches per annum for Indian Railways as well as a wagon order reservation of 8 per cent per year out of the PSU quota. The purchase price preference will, however, be subject to the company matching the price of the lowest bidder in the open tendering process. Meanwhile, the Union Government is expected to go in for an appeal before the Supreme Court if the Calcutta High Court passes strictures against the sale of Jessop & Co to Ruia Cotex, the sources said. The case will come up for hearing before the high court on April 11.
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