Bifr Accepts Gkws Case After Initial Rejection
Mumbai-based diversified engineering company GKW Ltd's case referred to Board for Industrial and Financial Restructuring (BIFR) has, after an initial rejection on March 16, been accepted on Friday, April 28.
The company was referred to BIFR on the basis of its performance till March 31, 1999.
The registrar of BIFR rejected the case initially because the company's net worth was
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found to be exceeding its accumulated loss of about Rs 62 crore, said a high ranking company source.
The company's net loss in the year ended March 31, 1999 was a shade under Rs 76 crore. Its loss in the financial year 1997-98 was around Rs 30 crore. In the financial year 1999-2000, it is expected to be in excess of Rs 100 crore.
On rejection, the company appealed again on March 24 - the appeal heard on April 18 - to the secretary of BIFR with a revised estimate of its net worth, which comprises of free reserve and paid-up capital.
According to the revised estimate, the company's net worth stands at Rs 35.43 crore.
The revised estimate puts the company's free reserve at around Rs 4.23 crore, which earlier on was estimated to be Rs 67 crore or thereabouts. On closer examination nearly Rs 63 crore of it was found to be not qualifying as free reserve, said a high level company source.
The company has been suffering mainly due to market recession and huge interest burden. As of March 31, 1999, the company's interest liability was around Rs 30 crore, and secured loans stood at Rs 152 crore.
"This is way too high," said a company official, adding "with the case accepted by BIFR, we hope to get some waivers and reduction in interest rates, which will help us turnaround."
What might be of more significance to the company's revival is its assets which was in excess of Rs 273 crore in fixed assets and Rs 122 crore in current assets (stocks, raw material, debtors etc) till March 31, 1999. The non-productive component in its assets is, however,
very high, around Rs 150 crore, said a high ranking company official.
The company intends to sell off its non-productive assets to liquidate its outstanding loans, and is also mulling over demerger of some units. The company, however, has not managed find takers for its non-viable units like Pomex Steel and the cement division, which are up for sale for a long time.