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Mony K. Mathew

Thiruvananthapuram , Sept. 27

THE Kerala Government has accepted the recommendation of the Enterprise Reforms Committee (ERC) for selling majority stake in the Kannur-based Keltron Component Complex Ltd (KCCL) to a strategic partner.

The order issued in this regard permits the holding company, Kerala State Electronics Development Corporation (KSEDC), to cut its stake in KCCL to below 50 per cent and give management control to the strategic partner.

Besides, KSEDC may freely trade 46 per cent of the remaining stake in the stock market.

The company's paid-up capital was Rs 242.45 lakh and net worth stood negative at Rs 204.35 lakh as on March 31, 2002.

Outstanding long-term liabilities amount to 1,668.8 lakh, of which Rs 1,204.83 lakh is due to IDBI, ICICI and IFCI, Rs 448.77 lakh to KSEDC and Rs 15 lakh to the Department of Electronics of the Union Government.

This is despite the fact that KCCL had remitted Rs 18.50 crore to the consortium of banks against a principal outstanding of Rs 8 crore, according to the order.

It is also pointed out that as on March 31, 2002 the gross and net fixed assets of the company were of the order of Rs 22.94 crore and Rs 4.56 crore respectively.

As on January 2003, the company owed Rs 3.86 crore to the creditors, while Rs 8.44 crore was due from customers.

The company has also overdrawn cash credit facility to the extent of Rs 9 crore from banks. The net current asset position is Rs 19.07 crore.

The ERC had recommended that considering the need for one-time settlement of the long-term liabilities and to implement an employee separation scheme covering 40 personnel in the middle managerial and surplus categories, the Government should provide an interest-free loan of Rs 9.73 crore to KSEDC through the Kerala Industry Revitalisation Fund Board (KIRFB).

As a security for the loan, the charge of the fixed assets of KCCL may be created in favour of KIRFB.

The Government loan could be settled from the proceeds accruing through the sale of stake and from the sale of the excess land of the company.

Also, KSEDC should waive the interest on loans provided to KCCL, which, in turn, could be adjusted against the former's interest dues to the Government.

The order states that specific proposals for the implementation of the Government decision will be formulated by the Restructuring and Internal Audit Board (RIAB).

In the case of disinvestment or sale of assets, the proposals will be worked out by RIAB after valuation of assets, due diligence and following a transparent procedure for invitation and evaluation of bids.

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