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Thursday, Feb 21, 2002

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Richardson & Cruddas revival scheme declared failed -- ICICI to advertise for change in management

Richa Mishra

NEW DELHI, Feb. 20

TAKING note of the fact that the ailing Richardson & Cruddas (1972) Ltd (RCL) and its promoter, Bharat Yantra Nigam Ltd (BYNL), have failed to revive the company under the sanctioned scheme of 1995, the Board for Industrial and Financial Reconstruction (BIFR) declared the sanctioned scheme as ``failed''.

At the recent hearing, the Bench observed that the company's promoters were unable to extend any support to RCL as its own finances were not in good shape. The Board appointed ICICI as the operating agency (OA).

It directed the OA to advertise for change in management, inviting offers for takeover/leasing/amalgamation/merger for rehabilitation, with or without one-time settlement (OTS) of the dues of financial institutions (FIs) and banks including measures contemplated under Sections 18(2)(i) and 18(ii) of the Sick Industrial Companies (Special Provisions) Act, giving 60 day time for submission of offers.

BYNL, and the Union Government can also submit a scheme for rehabilitation of the sick company in response to the advertisement, with or without joint venture, the order said.

Further, the Bench directed the OA to prepare a draft rehabilitation scheme. Such a scheme is to be prepared by the OA within a stipulated time-frame and the same could be made available to the intending bidders who would also be free to submit a revival proposal of their own in response to the advertisement.

The advertisement will provide for rehabilitation of the company under various alternatives available in terms of Section 18, providing for takeover in full or in part, of the company, by way of leasing, amalgamation and/or merger, with the present company, the holding company or any other, with or without joint venture or with a co-promoter, and will ensure that the process of takeover shall not jeopardise in any manner the interest of the labour or any secured creditors.

Further, the incoming promoters shall take over full liability and ensure continuity of service of the workers and all dues as per industrial laws and also meet statutory liabilities in all respects including those of the State and the Central Governments. Such a proposal could also include one-time settlement (OTS) and VRS.

The OA would also send an interim status report to the Board after March 31, 2002 indicating, inter-alia, the position of offers received in response to the advertisement, the order said.

``If no concrete rehabilitation proposal with means of finance fully tied-up is received in response to the advertisement, the Board may consider passing further appropriate orders which may include issue of a show-cause notice for winding up of the company,'' the Order said.

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