The Hindu Business Line : GKW shines on BIFR deal

THE GKW stock today hit the upper circuit on the NSE as the Board for Industrial and Financial Reconstruction approved its rehabilitation package. The stock frozen at the 10-per cent circuit at Rs 30.25. About 3.26 lakh shares changed hands in the counter on the exchange.

Sources in BIFR confirmed that the in-camera hearing took place today and the package was approved.

According to sources close to the management, though the net realisable value from the sale of some of the company's properties is mentioned in the document at around Rs 200 crore (book value is just Rs 63 lakh), the actual realisation could be much more. The company's liabilities, in terms of manpower rationalisation, one-time payment towards lenders (as on November 31, 2002), payment to UTI and Army Group Insurance (AGI) Fund, capital expenditure including relocation of the bolt & nut and steel divisions, unpaid wages & salaries, redemption of preference shares and other creditors as also additional working capital are estimated to be Rs 122.65 crore.

SBI, the operating agency, other bankers in the consortium and UTI & AGI Fund have agreed to sacrifice interest to the tune of Rs 170.27 crore.

The company has 34.57 acres of land at Bhandup in Mumbai, 74 acres at Andul near Kolkata and a plot of land at Rajaji Nagar in Bangalore.

The Mumbai and Bangalore properties, according to market estimates, should fetch around Rs 600 crore. A part of the Andul property is also slated to be up for sale, but the West Bengal Government permission is awaited.

After paying off dues to the banks and rationalisation in manpower, the package envisages that the company, through viable operations, would be back in the black in the very first year. Incidentally, the AGM is scheduled to be held on September 27.

According to a stock analyst, the realisable value per share (after providing for the liabilities) from the proposed sale of a part of the assets would be around Rs 160. The company has a total equity of Rs 29.66 crore.

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