Financial Daily from THE HINDU group of publications
Wednesday, Apr 20, 2005
Financial Daily from THE HINDU group of publications Wednesday, Apr 20, 2005 |
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Corporate
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Sick Units Row over OTS holds up Trayons revival G.K. Nair
Kochi , April 19 THE delay in reaching a one-time settlement (OTS) with financial institutions and banks by the prospective promoters even after six months of signing an agreement with the Government is prolonging the re-opening of the Travancore Rayons Ltd at nearby Perumbavoor. The recent meeting called by the Chief Minister, Mr Oommen Chandy, with the representatives of the banks, financial institutions and the promoters failed to make any breakthrough on the OTS issue. He is said to have advised the promoters and the bankers to continue their discussions and arrive at a mutually acceptable position before the next meeting scheduled for April 27. The banks/FIs and the promoters have to climb down from their present stand for reaching a settlement, Mr P.P. Thankachan, trade union leader and former Speaker of the State Legislative Assembly, who participated in the last meeting, told Business Line. Both parties were sticking to their own positions and hence the meeting "did not reach anywhere," he said. The delay in reaching the OTS has impeded the progress on discussions with the trade unions and on important issues to be settled for reopening of the company, he said. The Government had signed an agreement with the Coimbatore-based promoters NDEE Group in July last for reviving the unit. As per the agreement, all the loan liabilities including those taken by the company under the Government guarantee would be taken over by the promoters and would be settled through one-time settlement. Similarly, all the dues to the State Government and the Government agencies would also be settled. Government concessions and benefits would include permission to pay the electricity charges and sales tax in instalments and assistance and cooperation for setting up of new hydroelectric projects, according to official sources. The agreement, which had been prepared after detailed examination by different Government departments, was finalised after discussions with both ruling and opposition parties and the trade union representatives. It was expected then that the re-opening of the company would take place in three to four months as the promoters had to hold discussions with the financial institutions, banks etc., for a viable one time settlement of their dues. Besides, it had also to discuss with the trade unions for a restructuring/re-phasing process of the work force, they said. It is understood that the promoters might effect a reduction in the number of workers through VRS and re-deployment elsewhere. "Probably this is the first ever event where the rehabilitation proposal of a private party has received the unanimous support of all the trade unions as well as the ruling and opposition parties alike, including the CITU," trade union sources said. As per the rehabilitation proposal, the promoter is to invest Rs 530 crore spread over a period of five years for modernisation of the company, they said. The BIFR had ordered the closure of the sick unit in 2002. It was at this juncture the new promoter had come forward with a revival package and as it had been under the consideration of the State Government, the Kerala High Court had stayed the closure of the unit. The company is under lay-off for over two years now and about 1,200 workers are without wages. At present, the unit is maintained by a skeleton staff of 70 people on a monthly wages of Rs 500, trade union sources said.
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