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Kolkata , Oct. 1

THE Rs 170-crore restructuring and revival package for Andrew Yule Ltd, a Government enterprise, now cleared by the Department of Heavy Industry, is likely to come up at the CCD meet on October 3. The plan calls for upgradation of manufacturing facilities in all divisions of the company for improvement in productivity and quality, and a cut in operating cycle time.

Once through with CCD (Cabinet Committee on Disinvestment), the financial bids by potential strategic investors will come up, and a fresh data room for inspection by interested parties will have to be set up at the company's headquarters here for necessary inspection. The entire process may take another five months to be completed.

Starved of working capital requirements, and with net worth totally eroded, all three divisions of the company, namely engineering, electrical and tea were now going through tough times, unable to execute orders especially from the power sector.

The restructuring proposal, based on a detailed report prepared by L.B. Jha & Co, chartered accountants, includes conversion of existing government loans into equity, infusion of fresh working capital from Government of India, issuance of Government guarantee to enable the company to mobilise a matching amount from the market through private placement of bonds and mobilisation of resources through sale of company's holdings in some of the group companies like Tide Water Oil.

Talking to Business Line after the company's annual general meeting here on Tuesday, Mr Arindom Mukherjee, chairman and managing director, said he was quite hopeful of an early clearance for the company's revival plan. Despite having impressive orders in hand from customers, the execution thereof was becoming difficult as the working capital crisis continued to deepen. He said the severe crisis faced by the company's Tea Division, contributed by the difficulties of the Indian tea industry as a whole during 2002-03 and still continuing.

The average prices realised for tea in Guwahati, Siliguri and Kolkata auctions have declined from Rs 80.57 a kg during 99-2000 to Rs 66.37/kg in 2002-03, and the current year's trend so far is even worse, he said. The bulk tea producers, he felt, have been pummelled by a steep fall in price on the one hand and rise in input costs owing to increase in salaries and wages and sharp increase in essential inputs like fertiliser, coal, gas, diesel, etc., on the other. This, together with mushroom growth of large number of bought leaf factories and inroads made by imported tea have severely shrunk the margins of tea manufacturers, he pointed out.

The company's tea division has lost nearly Rs 16.88 crore and Rs 27.10 crore owing to adverse price and cost variance respectively during the period 97-98 to 2002-03. The erosion in the profitability of Andrew Yule's tea division is said to be around Rs 52 crore in the last four years, and the outlook for the current year is not all encouraging, according to the CMD.

Earlier, responding to shareholders' anxious queries on the future prospects, Mr Mukherjee said as regards the company's Electrical Division, new thrust has been given on exports, product development and validation of test certificates as per the changing needs of the market and customer profile to obviate continued heavy dependence on state electricity boards.

He said the Engineering Division, which over the years has downsized manpower and reduced overheads, was now poised for revival. The division has been receiving turnkey contracts from Nuclear Power Corporation and Eastern Railway for installation of water pollution control and sewerage systems at various workshops of these organisations.

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