Sbi Told To Loan Jessop Rs 15 Cr
The Board for Industrial and Financial Reconstruction (BIFR) has directed Jessop & Co Ltds operating agency, the State Bank of India (SBI), to advance a Rs 15 crore Fund Interested Term Loan (FITL).
This reduces the down payment of Rs 41 crore that Jessop owes them by way of repayment of loans.
Such a proposal had already been passed by the government of India earlier.
Also Read
This entails a reduction in the overall Rs 105 crore draft rehabilitation scheme circulated by the BIFR earlier.
The gap left by the governments decision to pay Rs 24 crore instead of Rs 70-crore will now be filled by the sale of the companys excess property, by Fund Interested Term loan (FTIL) from SBI and the remainder will be taken care of by the government.
The amendment of the package will be done by SBI, and has to be presented to the BIFR bench by September 15. The government will have to come to a decision by October 27, the date for the final BIFR hearing. The previous hearing was held on August 21.
A K Brahmachari, secretary general, National Confederation of Officers Association of Central Public Sector Undertaking (NCOA) told Business Standard: The BIFR bench was very favourable towards Jessops rehabilitation package.
He further said that the company has asked for working capital to sustain its production till implementation of the package, and the bench has requested the government and SBI to oblige.
The company is also cutting down its work force from the present strength of 3,850. The total strength has been reduced by about 2,500 in the last 5 years. The rehabilitation package specifies a work force of 3,665.
At present, the average income generated from sales is around Rs 5-crore, where it is felt that sales income should be around Rs 7-crore.
This, according to Bramhachari, is due to an acute shortage of money, preventing the company from buying enough raw materials.
Bharat Bhari Udyog Nigam Ltd, the holding company, has entrusted Jessop with a project in collaboration with a Czech company for making machinery for railway track maintenance for the Indian Railways.
Once this project goes on-line, Jessop hopes to be richer by Rs 25 crore. Currently the company, for its EMU and wagons section has orders from both the Indian and Vietnam Railways. But capacity utilisation in this plant is only around 65 per cent due to lack of funds.