Financial Daily from THE HINDU group of publications
Thursday, Mar 24, 2005
Autokast revival unlikely
Kochi , March 23
REVIVAL of the State public sector unit Autokast at Chertalai in Alapuzha district seems difficult as the Government is unlikely to provide the Rs 20 crore demanded by the company management.
The company had requested the Chief Minister, Mr Oommen Chandy, at a high level committee meeting recently to provide Rs 20 crore for clearing the outstanding liabilities of the State Electricity Board and the statutory dues, for reaching a one-time settlement with banks and towards working capital.
The Chief Minister said at the meeting that the company could be retained in the public sector "if the operations are viable," according to Mr Jayachandran, General Secretary, Save Autokast Forum.
Mr Jayachandran told Business Line that the CM had expressed his inability to extend budgetary support of Rs 20 crore now and that if the unit could be operated viably, funding could be explored from resources such as the Kerala Minerals and Metals Ltd (KMML), a profit making State PSU.
The trade union leader said the KMML funds "were in the treasury (prone to ways and means restrictions) and since the company required funds for its expansion, sourcing funds from it may not be easy."
However, the CM, he said, has asked the Principal Secretaries of the industry and finance departments to examine the profitability projection of the company.
Mr Jayaprakash claimed that the proposal submitted to the Government last year "is a viable project" and was prepared by an expert committee constituted by SPATO, an organisation of the officers of public sector units and autonomous bodies in the State.
"The employees and officers of the company have pledged their commitment and support for the implementation of the proposal," he said.
The trade unions, Mr Jayaprakash said, had put in their best efforts to show that the package, if implemented, could put the company back on track by raising the production to 300 tonnes a month. It clearly demonstrates that with modernisation and modification of machinery, production could be increased to 375 tonnes and all operating losses could be wiped out, Mr Jayaprakash said. Funds were needed to revamp the over 20 years old machinery and get rid of the interest burden.
The total interest liability now on a loan of Rs 5.22 crore taken in 1982 is Rs 42 crore while that to the KSEB (Kerala State Electricity Board) is Rs 8 crore. The banks have agreed for a one-time settlement for which Rs 10 crore is needed, he said.
It shows that the company can be profitably operated if the dues are cleared and the machinery is modified, he said. Another major constraint is the lack of working capital.
The trade unions and the management had requested the Government to arrange a working capital of Rs 1 crore and Rs 3.5 crore as a soft loan spread over three years for modernising the machinery. The Board of Industrial and Financial Reconstruction had then show caused that the bank could close the company to sell out its assets to recover the loan of Rs 522 lakh and interest from 1985 in case the State Government was not yet ready to submit a revival programme for Autokast and had not deposited 25 per cent of total amount with the operating agency.
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