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C.R. Sukumar

Hyderabad , March 22

THE hopes of the shareholders of the ailing Pennar Aluminium Company Ltd (Palco) that the company would be revived under the aegis of the Board for Industrial and Financial Reconstruction (BIFR) have faded.

Asset Reconstruction Company of India Ltd (ARCIL) has invoked powers under the SARFAESI Act and taken possession of the company's entire assets at Nagapore, since Palco failed to comply with the conditions of the notice issued by it.

Last year, ARCIL had been acquiring the financial assets of Palco worth around Rs 480 crore from banks and financial institutions including Industrial Development Bank of India (IDBI), ICICI, State Bank of India (SBI), State Bank of Hyderabad, State Bank of Mysore (SBM), Canara Bank, IndusInd Bank and South Indian Bank.

Being mutual funds, UTI, Life Insurance Corporation of India (LIC) and General Insurance Corporation (GIC), which hold around 10 per cent of Palco's financial assets, could not transfer their assets in favour of ARCIL. However, they have issued a no-objection letter in favour of the asset reconstruction company.

With ARCIL acquiring the financial assets of Palco, the latter has now automatically come out of the purview of the BIFR and would not be eligible for any rehabilitation package or incentives.

In the priority of ARCIL, the interests of shareholders come last.

ARCIL has already nominated two of its senior officials on to the board of Palco. The board currently has three representatives from the promoters group and one each from UTI and the Board for Industrial and Financial Reconstruction (BIFR).

As the company has gone out of its purview, BIFR is now expected to withdraw its nominee.

Immediately after taking possession of Palco's financial assets, ARCIL has appointed the Palco Managing Director, Mr P. Bhaskar Rao, as the custodian in his personal capacity.

Meanwhile, ARCIL is expected to appoint two more of its nominees to the board. It is currently looking at various options for realising the Palco assets, which includes merger of the company with Hindalco or Manaksia or even sale of the assets to various parties.

Confirming the developments, Mr Bhaskar Rao told Business Line that the Palco promoters, who currently hold around 27 per cent equity, were not interested in contesting the move of ARCIL in taking possession of the company's financial assets.

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