The Hindu Business Line : SBI told to scout for new management to revive NEPA

THE hunt for a resourceful management to revive the Madhya Pradesh-based newsprint maker, NEPA Ltd, seems to be starting all over again. The Board for Industrial and Financial Reconstruction (BIFR), in its recent order, has directed State Bank of India (SBI) to advertise for change of management of the company.

"Despite lapse of considerable time and opportunity having been given to the existing promoters and the company, their actions have clearly established their lack of resourcefulness and seriousness in the company's revival. Hence, the bench directs SBI to notify change of management with a view to explore all other alternatives for the company's revival on a going concern basis, with or without some or all liabilities of NEPA," the Board said.

The advertisement for management change would be based on the company's latest available audited balance sheet or provisional balance sheet as on March 31, 2003/March 31, 2004, incorporating the latest financial data, BIFR bench stated. This, according to the Board, would be meaningful in attracting bids, after due diligence.

SBI, the operating agency (OA) would invite offers for takeover, leasing, amalgamation or merger for rehabilitation of NEPA with or without one time settlement of the dues of financial institutions and banks, giving 90 days time for submission of offers, the order said. The OA may indicate in the advertisement that offers from outside promoters under the relevant provisions of Sick Industrial Companies (Special Provisions) Act (SICA) can also be considered, BIFR bench said.

It also permitted the present promoters to submit their fully tied-up offer, with or without a co-promoter, in response to the advertisement. The proposal should be duly supported by a techno-viability study by an independent consultant, the order said. "All bids should also contain proof of concrete sources of funds to be brought in to support the rehabilitation proposal," it said.

The Board further observed that since it's a large central public sector undertaking (CPSU), a due diligence report should be submitted by the OA to BIFR and also to all concerned parties within the stipulated time frame given in the advertisement. "All revival proposals should include the broad rehabilitation strategy, additional funds to be inducted, number of workers to be retained, and the time period for revival. However, proposal for purchase of assets per se would not be considered," it said.

Further, the Board also directed the company and its promoters to deposit a sum of Rs 1 lakh on accounts of as `advance' to meet the cost of advertisement with the SBI. "Failing which the proposal, if any, to be submitted by the Government of India, as existing promoters, would be viewed with disfavour, on the assumption of lack of their resourcefulness to revive the company," it pointed out.

In case no proposal for revival is received within the stipulated time frame the Board would take other alternative decisions as per law, which may include issue of show cause notice for winding up, the bench said.

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