The Hindu Business Line : HC clears Ruia Group's purchase of Hirakud Cables

Though the State Government had favoured the proposal to divest the sick State PSU in favour of the Ruia Group in April, the takeover was delayed due to court cases challenging the decision.

The acquisition will serve as a forward integration for the Ruia Group flagship Jessop & Co's fabrication business.

"The High Court recently cleared the proposal subject to certain conditions regarding the existing employees of Hirakud Cables. Accordingly, the Orissa Government has offered us a final proposal," said the Ruia Group Chairman, Mr P. K. Ruia. "Now that legal hurdles are over, we expect to take over the company within a month."

With two manufacturing facilities at Hirakud and Bhubaneswar, Hirakud Cables offers a complete product package with turnkey construction of transmission lines for the power sector.

According to Mr Ruia, the development will pave the way for the acquisition of IDCOL Rolling Mills Ltd (IRML), also an Orissa Government PSU, at Hirakud. Though it emerged the highest bidder for IRML in June, Jessop was waiting for the Hirakud Cable proposal to be cleared before making the final move on IRML.

Meanwhile, the Board for Industrial and Financial Reconstruction (BIFR) has allowed Jessop & Co to go in for a Rs 50-crore rights issue without appointing a merchant banker and other such formalities.

Accordingly, the company will seek participation of its two major shareholders, the Ruia Group and the Centre — together holding 99 per cent equity stake — and its minuscule number of public shareholders in the issue some time this week. The shareholders will be offered seven days to respond to the call.

Jessop has already reduced the face value of its shares from Rs 10 to Re 1 each, leading to a reduction in the paid-up equity capital from Rs 95 crore to Rs 9.5 crore. The exercise has created a fund of Rs 85.5 crore, which was set off against an accumulated loss of Rs 118 crore as on March 31, 2005.

With fresh infusion of Rs 50 crore, the paid-up equity base will be Rs 59.5 crore (against an accumulated loss of Rs 32.5 crore) making the company's net worth positive, which, in turn, will help the company to be delisted from BIFR.

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