Duncans referred to BIFR
Kolkata, Sept 14 (UNI) Duncans Industries Ltd, the flagship company of the city-based G.P. Goenka Group, has been referred to the Board for Industrial&Financial Reconstruction (BIFR).
"The board of directors of Duncans Industries decided to make the referral because the total accumulated losses of the company have completely eroded its net worth," chairman G P Goenka said at the annual general meeting.
Duncans Industries, which has operations in fertiliser and tea, has been facing an adverse situation for the last few years following its dispute with the Union Government over the Retention Price Subsidy (RPS) scheme.
As on March 31, 2006, the company clocked a turnover of Rs 173.36 crore but ended with a net loss of Rs 798.89 crore because it provided for Rs 446.94 crore the disputed subsidy amount in the profit&loss account. As a result its total accumulated loss jumped to Rs 954.40 crore as against Rs 155.50 crore on March 31, 2005. The March 31, 2006, balance sheet of Duncans Industries has shown a negative net current asset of Rs 239.39 crore.
The company fought a futile legal battle against the Centre at the Allahabad High Court on the RPS issue. Subsequently, its Special Leave Petition was also disallowed by the Supreme Court.
In another development, Duncans Industries has decided to make a foray into the cash-rich real estate development business. The company has tea gardens in North Bengal. A special resolution has already been proposed for the shareholders' approval at the annual general meeting and was sent for polls.
"The resolution is only an enabler. The company will have to seek government approval for reallocation of land for real estate since the land was given for tea production only," Goenka said.
Meanwhile, as per the terms of the restructuring package sanctioned under the CDR (Corporate Debt Restructuring) mechanism, Duncans Industries is issuing cumulative redeemable preference shares (CRPS) to its lenders.
A total of Rs 160 crore of CRPS would be issued and it would have a negligible interest rate of 0.001 per cent. CRPS would be redeemed in five annual installments starting from 2019-20. In order to accommodate the CRPS, the authorised share capital of the company is being increased to Rs 225 crore from Rs 150 crore. The resolution was sent for polls by the shareholders of the company.
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