Financial Daily from THE HINDU group of publications
Monday, Nov 08, 2004
Financial Daily from THE HINDU group of publications Monday, Nov 08, 2004 |
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Corporate
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Restructuring Jessop plans capital recast to wipe out losses Pratim Ranjan Bose
Kolkata , Nov. 7 THE disinvested Jessop and Co Ltd is planning a capital restructuring exercise to wipe out its accumulated losses. The company will discuss the issue at its board meet scheduled this month. The Centre divested 72 per cent of its stake in the ailing engineering giant in favour of the Ruia Group in September 2003. During its first year of operation under the Ruias, the company has registered a net profit of Rs 2.5 crore. Currently undergoing a corporate restructuring programme, Jessop is expecting to register a turnover of Rs 60 to 70 crore during 2004-05. Talking to Business Line here on Saturday, the Chairman, Mr Pawan Ruia, said that the company's paid up capital is at Rs 120 crore as against a turnover of Rs 45 crore and an accumulated loss of Rs 125 crore. "There is a severe mismatch between the size of business and the paid up equity of the company. "Moreover, the accumulated loss is coming in the way of enhancing the company's business portfolios," he observed. "Accordingly, we now want to bring down the paid up capital to a realistic level and wipe out the accumulated loss and pave the way for better business opportunities. We have already discussed the issue with the Union Government which has liked the idea." According to Mr Ruia, as per the agreement between the Government and his group (on Jessop stake sale), the existing management had complete liberty to propose the necessary capital restructuring. On whether the bankers and financial institutions have favoured the proposal, Mr Ruia replied in the affirmative, stating that the company held a credit guarantee limit of Rs 30 crore. Banks and FIs hold a little over 0.4 per cent stake in the company followed by a nearly 1.5 per cent public share holding retained when the company was listed before nationalisation.
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