The Hindu Business Line : Rs 170-cr draft revival plan for GKW circulated

THE Board for Industrial and Financial Reconstruction has circulated a Rs 170.27-crore-draft rehabilitation scheme for the ailing GKW Ltd, a multi-product multi-locational company. The company's rehabilitation proposal is based on a turnaround strategy, which encompasses, business, organisational and financial restructuring.

According to the scheme, the proposed means of finance included disposal of immovable properties and sacrifices from bank and financial institutes. As per the proposed means of finance the company hopes to raise Rs 108.71 crore through disposal of immovable properties and sacrifices from banks and financial institutions would amount to Rs 47.62 crore.

The surplus manpower of the company has resulted in high manpower cost to turnover ratio, the BIFR bench noted. The total cost for manpower rationalisation has been estimated at Rs 48.91 crore.

State Bank of India, which is the operating agency, had submitted the rehabilitation scheme in January 2004.

As per its report the proposed rehabilitation scheme was considered to be economically viable proposition and merited support from the stakeholders.

Based on the report, the BIFR formulated a draft rehabilitation scheme for revival of GKW with the additional stipulation that promoters' contribution of Rs 3 crore shall be brought in as unsecured interest-free loans within a maximum period of 6-8 months from the date of sanction of the scheme.

The amount would be utilised towards the cost of rehabilitation scheme to meet the requirement of funds in case of delay in the sale of surplus assets or shortfall in sale of proceeds, or shortfall in funds generated out of operations, the bench said.

Further, guidelines for the asset sale committee has also been made part of the scheme. However, the committee will be constituted by the Board and the actual sale of assets can commence only on sanction of the scheme, the bench said.

As per the proposed scheme, the net worth of the company would turn positive within three years and four months from the cut-off date (November 30, 2002) of the scheme by March 31, 2005.

Some of the reasons for sickness cited by the company included obsolescence of technology, non-competitive market price, general recession in the industry, high debt burden and consequent interest costs, and surplus labour. The Board will hear objections/suggestions to the draft rehabilitation scheme in April.

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Rs 170-cr draft revival plan for GKW circulated