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M. Ramesh

Chennai, Oct. 31 A Rs 30-crore ‘exceptional income’ arising out of resolution of a dispute with the Rajasthan State Electricity Board (RSEB) enabled Balaji Distilleries post a net profit of Rs 32 crore for the second quarter of the current year, compared with Rs 12 crore in the comparable period of last year — a rise of 166 per cent.

This windfall has helped accelerate the process of wiping out the accumulated losses, which as of September 30, stood at Rs 311 crore.

Sources in Balaji Distilleries told Business Line on Friday that the company expects to come out of the purview of the Board for Industrial and Financial Reconstruction (BIFR) by March 2010. A ‘draft rehabilitation scheme’, prepared by IDBI Bank, is now with the Board, awaiting approval.

But the company officials see it as a mere formality and say that the company is well on its way towards recovery. All the erstwhile creditors — ICICI Bank, IFCI, Bank of Baroda and IOB — were paid off last year with the help of a Rs 119-crore loan from Standard Chartered Bank.

The company produces a range of liquors and beers from its distillery in Nellore, Andhra Pradesh, and brewery at Tiruvallur, near Chennai. In the first half of the current year, it sold 46.85 lakh cases of liquors (40.84 lakh in same period last year) and 45.27 lakh cases of beer (41.23 lakh cases).

Sources said that the dispute with RSEB arose out of a ‘sale and lease back’ transaction that the company did with the Board, in 2000.

The transaction ran into trouble after both parties held back payments and two years ago, the matter went to an arbitrator.

The award came in the favour of Balaji Distilleries in March and the company received about Rs 14 crore in August, which is a part of the ‘exceptional item of income’. The rest of the ‘exceptional item’ is ‘book adjustments’ for assets.

The cash inflow will help the company control its interest costs, which were as much as Rs 30 crore last year.

More Stories on : Sick Units | Breweries

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