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Fresh hopes on revival of Travancore Rayons

G.K. Nair

KOCHI, Sept. 6

THE Kerala State-owned Travancore Rayons Ltd (TRL) is on the path of rehabilitation following the emergence of a co-promoter to revive the company.

The Board for Industrial Financial Reconstruction (BIFR) has asked the operating agency IDBI to obtain a detailed proposal from the prospective promoter Mr. S. Krishnakumar, a former Union Minister, and send it to the BIFR for its consideration.

TRL had received the intimation from the BIFR in this connection and the proposal would involve a one-time settlement with the financial institutions and a change of management, Mr. Jai Prakash, Managing Director of the TRL, told Business Line.

On instructions from BIFR, IDBI had advertised for a promoter/co-promoter as part of the revival strategy, and in response, only one offer for co-promotership had been received by the IDBI, he said.

A detailed proposal was being worked out by the co-promoter and the entire rehabilitation operations would take about 12 months, he said.

``With the restructuring of liabilities and one-time settlement, the company's ills will be solved and it will again enter an era of progress and prosperity,'' he said.

The company, which was declared sick in 1989, was struggling for its day-to-day activities due to financial problems and was ``unable to even carry on with its holding on operations'', he said.

TRL had approached the State Government for a short-term assistance of Rs. 6 crores which was yet to be released, he said. The paucity of funds had reached such a stage that the company had to secure advances from its traditional customers for paying the wages for August and the Onam bonus to its workers numbering around 1,200.

At the instance of the State Government, the Kerala State Industrial Development Corporation (KSIDC) had extended a short-term loan assistance of Rs. 4 crores last October, he said. With this, the company had increased the number of spinning machines in operations from 24 to 30 and could increase its production capacity by about Rs. 2 crores per month in terms of monetary value, he pointed out.

However, it could not carry-forward its plans in the absence of adequate working capital from the banks, he said.

According to Mr. Jai Prakash, the company had already established manufacturing of cotton linter pulp apart from producing sodium sulphate. Production of sulphuric acid was also possible with induction of some funds.

TRL, which had a good marketing network, also produced bio-degradable cellophane which had a bright export potential.

He said the company's asset value would come to around Rs. 75 crores and added that the State Government could convert the loans provided by it into equity while restructuring the company's capital base, he said.

The unit, which was set up in 1945 in the private sector, had a total paid-up capital of around Rs. 5 crores. As the Government which took over under an earlier rehabilitation package had failed to extricate the company from the red, BIFR had asked for a fresh rehabilitation package.

Under the fresh proposal of the Government, which was under the consideration of BIFR, induction of a new promoter was also envisaged, he said.