Chhabria May Pump Rs 100cr Into Swc Swc
Manohar Rajaram Chhabria, the principal shareholder in Shaw Wallace and Company Ltd (SWC), is likely to invest up to Rs 100 crore to revive the cash-strapped company. Chhabrias investment, routed through SWCs overseas parent, R G Shaw, could come by way of a rights issue or in any other manner permissible by the government.
Sources said Chhabria is believed to be keen to make large fresh investments in SWC, which would complement the companys recently initiated restructuring process. Chhabrias plans run counter to speculation that SWC has been put on the block.
``Chhabria, through R G Shaw, may pump in anywhere between Rs 50 crore to much more, running up to Rs 100 crore. It could be both through rights and even beyond that, sources told Business Standard. This move is expected to be welcomed by authorities, since it is a sign that the overseas parent is firmly behind the Indian firm. Chhabria had gained control of SWC by acquiring 100 per cent of R G Shaw. R G Shaw holds a stake of about 40 per cent in SWC.
The exact quantum of the investments from R G Shaw will depend on the progress and success of SWCs disinvestment programme, the sources said. The liquor major has decided to stick to its knitting and get out of non-core businesses like consumer products, gelatines and agrichemicals. Consequently, companies comprising the Consumer Products Division (CPD) and its brands, Shaw Wallace Gelatines, Shaw Wallace Agrichem and Shaw Wallace and Hedges, along with some real estate assets, are proposed to be sold off. Considerable progress has already been made on the CPD sale, the sources said.
The sources said the proposed divestment also depends on the attitude of the companys employees. Any attempt by the employees to stall the divestment plan would compound the companys problems, they added.
SWCs immediate requirement is put at around Rs 150 crore. Henkel had earlier offered to pay Rs 42 crore for the CPD, which is the reserve price for the bids invited this time. Hindustan Lever Ltd and Henkel are in the fray to acquire the CPD.
Meanwhile, the companys board is slated to meet tomorrow to discuss the companys 1995-96 results.
The accounts will thereafter be placed before the Company Law Board. The board is also expected to take stock of the progress of the financial restructuring plan at its forthcoming meeting.