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| RPG Cables to rope in strategic investor |
| PB Jayakumar / Mumbai Oct 22, 2009, 00:01 IST |
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RP Goenka-promoted RPG Cables, one of the largest power cable manufacturers in the country, is planning to bring in a new strategic investor as part of a plan to raise about Rs 200 crore to clean up debts and for erecting a new facility in Gujarat.
The five-decade-old company, which got out of the ambit of the Bureau of Industrial and Financial Reconstruction (BIFR) two months ago after four years of intense restructuring, is in talks with multiple players to raise funds, said sources.
Confirming the development, Nikhil Gupta, managing director, said: “We are in discussions with various players,including group companies. But it is early to divulge details.”
Deutsche Bank had picked up a 14.9 per cent stake in the company two years earlier, for about Rs 28 crore. The bank also gave a Rs 100 crore loan to reduce debts, which had piled up to Rs 300 crore. The Harsh Goenka-led RPG Group holds 33.42 per cent stake in the company.
RPG Cables has been growing at over 50 per cent every year over four years, to reach a turnover of about Rs 380 crore. It expects to reach a turnover of Rs 1,000 crore turnover in three years, said Nikhil Gupta.
The company, with debts of close to Rs 100 crore, is planning to set up a Rs 70-75 crore invested high-tension cable manufacturing facility near Baroda, with a production capacity of 120 km length per year. A few weeks earlier, RPG Cables had sold its 36,418 sq metre surplus land at one of its manufacturing plants at Thane to Windsor Realty for Rs 51.5 crore.
The onset of the mobile phone revolution in the second half of 1990s had caused the downfall of RPG Cables, a Rs 400-crore company in the 1999-2000 period, with Jelly Filled Telecom Cables (JFTC) for landline telephones contributing over 70 per cent of the peak business. Within a few years, its Rs 270 crore peak annual revenue from the sector turned to zero and debts mounted to about Rs 600 crore. The company had to close production at two manufacturing units, at Rai Bareli in Uttar Pradesh and at Mysore.
Senior officials of the company left in bad times and employee strength reduced from 1,500 in 2000 to 400 people. Market capitalisation shrank to Rs 11 crore and many fixed depositors demanded their money back. The power cable business worth Rs130 crore also collapsed, as creditors clamoured for money and new orders got cancelled.
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