The Hindu Business Line : Ester Ind rehabilitation moves a step ahead

THE rehabilitation proposal of Ester Industries Ltd (EIL), manufacturers of polyester chips, has moved a step forward with the Foreign Investment Promotion Board (FIPB) giving its nod for transfer of 14.04 per cent stake held by German financial institution, DEG, to the promoter, Saraswati Trading Company Ltd (STCL), for 50,000 euros.

The rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) had proposed this transfer of shares.

STCL is a Mauritius-based company in which NRI investors hold majority stake. It currently holds 44.42 per cent stake in EIL.

With the proposed transfer STCL's holding will go up to 58.46 per cent. However, STCL's investment into EIL will be categorised as foreign investor and not as overseas corporate body (OCB), despite STCL being a majority NRI-held company.

EIL was originally promoted by Mr Sitaram Singhania along with STCL.

It manufactures polyester chips, films and yarn and PET films.

The company became sick in the late 90s as a result of oversupply in the market and huge increase in the cost of its main raw material, DMT and MEG, during 1999-2000.

On complete erosion of its net worth as on March 2000, the company was referred to the BIFR and declared sick.

IDBI was appointed as the operating agency for the company and the rehabilitation scheme was sanctioned in November 2003.

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