Financial Daily from THE HINDU group of publications
Tuesday, Jun 08, 2004
BIFR hearing on notice to Autokast on June 29
Mony K. Mathew
Thiruvananthapuram , June 7
THE Board for Industrial and Financial Reconstruction (BIFR) is slated to hold a hearing on June 29 in Delhi on the notice issued by it to the Kerala Government-owned Autokast Ltd directing it to show cause for not winding up the company.
The show-cause notice was issued on April 13 this year after BIFR concluded that the management had failed to come up with a viable package for the revival of the company in spite of having been given ample time and opportunity.
Autokast, incorporated in 1984 in Alappuzha district for the production of castings, was referred to BIFR in 1992 after incurring continuous losses. Subsequently, BIFR had approved a rehabilitation package in 1995. The company, however, could not implement the package.
The consortium of banks and other creditor financial institutions will be represented at the forthcoming hearing, apart from officials from the management and the State Government, it is learnt.
Autokast was one among the 12 public sector enterprises identified by the Enterprises Reforms Committee (ERC) of the State Government two years ago for private sector participation. But till date, no move has been initiated in that direction.
ERC had then stated that the company could not operate profitably despite continued support from the State Government to the tune of Rs 55 crore. At that time, it was estimated that the company owed Rs 42.54 crore to the banks and financial institutions by way principal and interest. Other dues included Rs 3.98 crore towards statutory payments, Rs 5.50 crore to Kerala Industrial Revitalisation Fund Board (KIRFB) and Rs 10.63 crore to the State Electricity Board.
ERC also noted that the company was operating by re-cycling the funds from KIRFB. This could be allowed to continue provided the company did not incur any operating losses, it said.
The committee had recommended that the Power Department should continue power supply on the condition that the company pays the energy charges at the prevailing rates. On privatisation, the charges would be frozen at the prevailing rates for five years as stipulated in the industrial policy for new units.
According to the latest performance review by the Bureau of Public Enterprises, the company had incurred an operating loss of Rs 8.70 crore in 2001-02. It had accumulated losses to the tune of Rs 119.13 crore, while the net worth stood at a negative Rs 88.70 crore. The capacity utilisation was as low as 17 per cent.
The Government had offered a one-time settlement scheme to the banks and financial institutions in 2000. Though the latter accepted it, it did not materialise, sources said. The same was the fate with a second OTS scheme offered in the following year.
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