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JK Ind's proposal for Tyre Corpn rejected

Richa Mishra

NEW DELHI, May 1

THE Board for Industrial and Financial Reconstruction (BIFR) has rejected the revival proposal of J.K. Industries Ltd (JKIL) for the ailing Tyre Corporation of India Ltd (TCIL).

At the recent hearing, the Bench expressed the view that JKIL's offer did not amount to any revival proposal, and as such, was prima facie not acceptable.

The Bench recalled that in August 2000, it had directed the operating agency to advertise for change of management at Tyre Corporation. As per the March report of the operating agency, the only response to the advertisement was from JKIL.

JKIL proposed to utilise Tyre Corporation's manufacturing facilities of the tyre division on lease basis for a period of five years, and this did not amount to a revival proposal, the Bench observed.

The recent hearing involving the company, the operating agency and the Ministry of Heavy Industry (MHI) was held to consider the latest view of the promoters and decide on further course of action, since the matter could not be allowed to linger on indef initely, the board said.

Tyre Corporation has been directed by the board to submit its audited balance sheet as on March 31, 2000 to BIFR, the operating agency and all the secured creditors.

MHI and the company were asked to get the market valuation done for both the divisions of the company along with the man power rationalisation study (MPRS) for the Kankinara unit through independent consultants by May 15, 2001.

After the MPRS, the Government could formally announce the VRS for the surplus manpower of tyre division also, keeping it open for a specified period only, so as to see that Tyre Corporation did not lose its skilled manpower, the Bench said.

The internal approvals in this regard and necessary provisions for funds were to be arranged by the Government.

Further, BIFR had no objection to the closure and sale of the Tangra unit, subject to the satisfactory conclusion of VSS. However, for effecting sale of its assets, an Asset Sale Committee (ASC) would be constituted by the Government, the board said.

The sale would have to be conducted as per the given guidelines, after getting the reserve price approved by BIFR and the operating agency in the light of the updated valuation report by May 31, 2001.

``Thereafter, the operating agency will issue comprehensive advertisements for sale of the Tangra unit, duly highlighting the strengths and weaknesses of that unit. These advertisements should be issued by June 15, 2001,'' the Bench said.

In case the highest bid received is more than the reserve price, the MHI itself, on ASC's recommendations, could finalise the sale, the board said.

However, in case the best bid available happened to be lower than the reserve price or a bid lower than the highest one that was proposed to be accepted, the Government would seek BIFR's prior approval, giving justification for the preferred bid, the Ben ch said.

``In order to ensure that only serious bids were received, the operating agency/Government could seek earnest money deposit of around two per cent of the reserve price,'' it said.