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BIFR draft scheme to revive United Bleachers

Richa Mishra

NEW DELHI, July 20

THE Board for Industrial and Financial Reconstruction (BIFR) based on the revised rehabilitation proposal received from Canara Bank, the operating agency (OA), has circulated a draft rehabilitation scheme (DRS) for United Bleachers Ltd (UBL).

UBL, engaged in the processing and printing of textile fabrics for both domestic and international market, was declared a sick company in November 1997 and Canara Bank was appointed as the OA.

The Bench recalled that UBL was promoted by a group of companies engaged in textile trade lead by Lakshmi Mills Ltd, Coimbatore (holding 57.70 per cent of the shares).

Subsequently, in February 1996, UBL was taken over by ``Swastik Group'' from the group of companies for a total consideration of Rs 36.13 lakh.

At the recent hearing, the Bench circulated a DRS for the ailing company. The total cost of the scheme is estimated at Rs 4.34 crore. The promoter's contribution is assumed at Rs 1.47 crore, which works out to around 30 per cent of the project cost plus sacrifices from the bank.

The measures for rehabilitation proposed are change in product mix and discontinuance of printing activity, where the margins are poor. The scheme also envisages modernisation, repair and maintenance of existing plant and machinery for better efficiency and effective utilisation of steam, water and power.

Retrenchment of labour and increasing machine productivity to reduce fixed expenses has also been suggested in the rehabilitation scheme. Further, clearance of existing hire purchase loan availed from Elgi Finance Ltd for knit processing equipment, repha sement of creditors and other liabilities including statutory dues.

The Bench has directed the company to reconstitute the board of directors by inducting a representative from Canara Bank and BIFR, as nominee director. Further, the company has been directed to not to declare any dividend during the period of rehabilitat ion without prior permission of BIFR and the banks and financial institutions.

UBL has also been directed to enter into an agreement with the workers to meet the projected level of production as per the rehabilitation scheme and settle the disputes, if any, with the unions, for smooth functioning in future.

Further, Canara Bank has been appointed as the monitoring agency (MA). Also, the company shall not undertake any new project or expansion or make any investment or obtain any asset on lease or hire without the prior approval of BIFR during the currency o f the scheme excepting to the extent of 5 per cent of its paid-up capital, the Bench said.