Rehabilitation plan for Surat Textile MillsMay 25th, 2008 - 2:11 pm ICT by admin
Ahmedabad, May 25 (IANS) The Board for Industrial and Financial Reconstruction (BIFR), which ordered the rehabilitation of Surat Textile Mills Ltd located in Surat city, has appointed C.K. Koshi, a senior bureaucrat in the Gujarat government, as a special director of the company. Koshi told IANS that he has begun functioning as a director.
He, however, said he has not yet attended any board meeting of the company and he was yet to get acquainted with the full details of the rehabilitation scheme proposed by BIFR.
The announcement of Koshi’s appointment was made by the company Friday in a communication to the Bombay Stock Exchange.
The company was registered with BIFR in 2003 and the Industrial Development Bank of India (IDBI) was appointed as the operating agency (OA). The agency suggested a five-point Rs.4.45 billion rehabilitation scheme for the company.
The major components of the scheme are a one-time settlement of the secured debts of the company amounting to Rs.77.41 billion by a payment of Rs.40.83 billion. The secured creditors in turn would waive the balance of principal, interest, and penal interest. Second, the promoters would inject additional working capital of about Rs.3.67 billion.
The scheme includes writing down the existing capital of Rs.6.7 billion to the extent of 90 percent by reducing the face value and paid up value of equity shares of the company from Rs.10 to Rupee 1.
Also the total cost of scheme will be met by issue of fresh equity shares at par on a preferential basis to either promoters or strategic investors for Rs.1.55 billion. The promoters will fund the balance of Rs.2.9 billion and provide it to the mills as interest free soft loans.
M.R. Momaya, managing director of the company, could not be reached to ascertain the status of the working of the company.
Surat Textiles Mills was incorporated in 1945 and was known as Garden Cottons & Yarns. The company is engaged in the manufacture and sale of polyester filament yarn, polyester chips and spun yarns. It has three manufacturing facilities in Surat and one at Silvassa, about 140 km from Surat.
The total share capital of the company is Rs.670 million. Its total debt is estimated at Rs.860 million.
According to the major shareholding pattern of the company, promoters control 77.5 percent of the holding while banks and financial institutions account for 13.81 percent. The share holding by the public was 7.4 percent.
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