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Draft rehab scheme for Southern Ferro circulated

Richa Mishra

NEW DELHI, Dec. 8

BASED on the report submitted by the Industrial Development Bank of India (IDBI), a draft rehabilitation scheme (DRS) has been circulated by the Board for Industrial and Financial Reconstruction (BIFR) for Southern Ferro Ltd (SFL).

The cut-off date for calculation of reliefs and concessions has been assumed as December 31, 1999. SFL, in its proposal, envisaged a promoters' contribution of Rs 62 lakh for 2000-01 to be raised from friends and relatives.

Of the Rs 62-lakh, Rs 47 lakh is to utilised to meet the cost of the scheme and the balance Rs 15 lakh will be used for part payment of the first instalment of institutions and banks' dues.

Further, the promoters are to retain the existing and future unsecured loans as interest-free and subordinated to institutional and bank loans. Any shortfall in projections with regard to profitability and cash flow will be met by infusion of additional interest-free unsecured loans, the scheme envisaged.

According to the scheme, the promoters are to execute a long-term agreement with the workers to ensure smooth functioning of the unit during the rehabilitation period.

Karnataka State Industrial & Investment Corporation (KSIIDC) will be designated as the monitoring agency (MA).

SFL, the scheme envisages, will constitute a management committee in a form satisfactory to BIFR. The MA will review, on a quarterly basis, the operations of the company in all aspects and closely monitor the implementation of the revival scheme.

The promoters are to bring in their entire contribution before the sanction of the scheme. SFL has been directed not to undertake any new project or expansion or make any investment or obtain any assets on lease or hire without the prior approval of BIFR and the MA during the currency of the scheme.

SFL commenced operations in 1972 as a partnership firm, to carry on the business of manufacture of rolled products. Later in 1992, it was incorporated as a public limited company. It was declared sick in 1999. With the improved market for steel and power scenario in Karnataka, the company does not envisage any difficulty in marketing its products, SFL submitted before the Board.