New Delhi, Sept. 1
ESCORTS Ltd on Thursday said that it was in final stage negotiations for financially restructuring its balance sheet by injecting funds into operations and replacing high cost debt.
The company also announced the appointment of Mr Nikhil Nanda as the Group Chief Operating Officer (COO) and a restructuring of its board of directors, under which three of the company's directors the former UTI Chairman Mr S A Dave; Mr M.G.K. Menon and Mr P S Pritam, who had earlier resigned have joined the board again.
Two directors who had resigned earlier the investment banker Mr Nimesh Kampani and noted tax expert Mr Y.H. Malegam are learnt to have consented to be advisors to the company.
Mr Nikhil Nanda, COO, Escorts Ltd, said that the company would be able to overcome the financial crunch within the next 3-4 weeks and funds raised would be utilised to increase productivity and profitability of the tractor division. "The task is to bring back the company on rail through restructuring and professionalism," he said. Mr Nanda, however, declined to disclose details on the restructuring and how the company is planning to raise funds.
Escorts had suffered a net loss of Rs 71.33 crore during April-June this year, largely due to heavy interest payment of about Rs 35.19 crore. Replacing its high cost debt would help the company to significantly lower its interest payments.
Sources pointed out that a proposal announced earlier this year to raise about Rs 778 crore from overseas investors did not materialise. As the company's financial crunch continued, there was a string of resignations by members of the company board last month.
In fact, the company had communicated to the stock exchanges on the resignations of various board members including Dr S.A. Dave, Mr Nimesh Kampani, Dr M.G.K. Menon, Mr Y.H. Malegam, Dr P.S. Pritam and Mr Jai S. Pathak, in August. Industry officials point out that the resignations were aimed at absolving directors of responsibility as the company was facing financial difficulties.
Mr Nanda added that the company has no plans to sell stake in Escorts Heart Institute and Research Centre.