The Hindu : Keltec comes out of the red

Online edition of India's National Newspaper
Friday, Apr 19, 2002

Southern States

Southern States - Kerala

Keltec comes out of the red

By Our Special Correspondent

THIRUVANANTHAPURAM April 18. The State public sector undertaking, Kerala Hitech Industries Limited (Keltec), has come out of the red and has started recording profits. The company is now into executing prestigious orders from institutions like the Indian Space Research Organisation and the Defence Research and Development Organisation (DRDO).

At a press conference here today, Keltec's Managing Director, Johnson Peter, said the company's turnaround was possible mainly due to the confidence reposed on it by the Government, the Indian Space Research Organisation (ISRO), the DRDO and some financial institutions. The company, with the capability to manufacture precision components and sophisticated engines for the aerospace industry, had been under severe debt burden until very recently.

With a loan of Rs. 27.56 crores drawn from financial institutions and banks and accrued interest touching Rs. 51 crores, the total liability of the company in 1999 was Rs. 78.56 crores. The company was required to achieve Rs. 26.91 crores worth value-addition at that time to break even, while the possibility was only in the range of Rs. 12 crores.

Keltec came out of its debts under a one-time settlement of the liabilities made with the financial institutions and banks. The company paid the principal amount of Rs. 27.56 crores and the financial institutions, in turn, waived the full interest accrued till December 31, 1999, amounting to Rs. 51.04 crores.

The funds required for the one-time settlement were obtained from the ISRO and the DRDO (Rs. 10 crores each) and the State Government (Rs. 7.56 crores). The ISRO and the DRDO, which are the main customers of the company, offered the assistance as interest free advance, to be adjusted against future supply of components to them during the next five years. The State Government's contribution too was in the form of interest-free loan. This need be paid back only after the repayment obligations to the ISRO and the DRDO are completed.

Mr. Peter said one big advantage with the company, employing just over 230 persons, was the good work culture it had built up. Employees belonging to all trade unions had given their full support to the management in the matter of productivity and quality of their work. He expressed complete confidence in Keltec's ability to repay the loans from ISRO and the DRDO on schedule. The first instalment of the repayment to DRDO will be handed over to its Chief Controller of Research and Development, A. Shivathanu Pillai, by the Industries Minister, P. K. Kunhalikutty, at a function on the company premises tomorrow.

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