Facor Under Bifr Soon, Seeks Delisting From Ses
Ferro Alloys Corporation of India Ltd (Facor), whose net worth has been fully eroded following persistent losses, will be referred to the Board for Industrial and Financial Reconstruction (BIFR). The reference will be made 60 days from the date of finalisation of the audited accounts, that is the day the accounts are adopted at the annual general meeting.
The Facor AGM is slated for September 25. Facor ran up losses of Rs 44.52 crore in 1997-98, down from Rs 51.02 crore the previous fiscal. Facor's share capital and reserves and surplus together total Rs 56.01 crore. The company has also decided to seek shareholder approval for delisting its shares from a number of regional stock exchanges, following a lack of trading interest in the shares at these bourses. Accordingly, the company will move for delisting at Ahmedabad, New Delhi, Bhubaneswar, Calcutta and Hyderabad stock exchanges.
This move will be undertaken after a special resolution is cleared at the AGM.
The delisting move has been prompted also by the hike in the listing fees at the stock exchanges, and also as an economising measure, the company has said.
The shareholder approval for voluntary delisting is being sought following the guidelines issued by the Securities and Exchange Board of India (Sebi) that corporates will have to seek shareholders' nod before undertaking any delisting move.
According to the company's annual report for 1997-98, the ferro alloys industry has been passing through the worst period in its history. Due to the unprecedented recession in this industry, a number of ferro alloy units have either shut down their furnaces or are operating at lower capacities. Since Facor has captive sources of power and chrome ore to meet about 50 per cent of the requirement, it is still able to stay afloat despite heavy odds.
The company also says that efforts are on to cut costs of production as much as possible. Power constitutes about 30 per cent to 50 per cent of the cost of production and the cost of power, the company says, is several times higher in India than in the competing countries of the world.
The Facor costs are therefore higher in comparison to competition, rendering its exports unremunerative.
During 1997-98, in spite of several problems, Facor was able to achieve a marginally higher turnover of Rs 388.45 crore, compared with Rs 382.33 crore the previous year.
Exports constituted 39.03 per cent of turnover. During 1997-98, average realisations on exports were slightly better than in the previous year on account of improvement in the prices as well as US dollar-rupee parity which enabled the company to reduce its losses a little.