Shri Shakti In Recast Mode

LPG marketing firm Shri Shakti LPG Ltd has embarked upon on a financial and business restructuring exercise.

The company has also appointed an international consultancy firm to assist in financial restructuring.

Shri Shakti LPG, a pioneer in the parallel LPG industry, was a leader in the private LPG market with more than 2 lakh customer base, a year-and-half ago.

The company suffered badly, losing most of its retail customer base due to abnormal delay in implementation of Central government order in 1997, with regard to withdrawal of subsidy on LPG supplied by public sector oil companies to the domestic category.

The company, which had recorded a net loss of Rs 10 crore on a turnover of Rs 60 crore in fiscal 1999-2000, was hit further in 2000-01, posting a loss of Rs 17 crore on a turnover of just Rs 10 crore.

"Added to the subsidy problem, the situation has been aggravated by the increase in disparity due to steep rise in international LPG prices. Schemes sponsored by the government - such as Dipam scheme in Andhra Pradesh - by subsidising even the deposit cost of LPG connections also affected our business," D V Satya Kumar, executive director, Shri Shakti LPG, said.

Shri Shakti has a debt exposure of over Rs 60 crore with interest rates varying from 15.5 per cent to 19.75 per cent.

"We want to replace the high-cost debt with low-cost debt. Additional funds will be infused if required. This is also the part of the mandate given to the consultancy firm. The report will be ready in two months," Satya Kumar added.

He declined to disclose the name of consultancy firm, since the firm had put a confidentiality clause.

Satya Kumar said he hoped that things would improve during the next financial year with the dismantling of administrative price mechanism in the oil sector in April 2002, and opening up of the LPG auto fuel market.

"The company has a patented technology to run three-wheelers on LPG. This our best bet," he added.