Bifr Reconfirms Devshree Cem Closure Verdict

The Board for Industrial and Financial Reconstruction (BIFR) has confirmed its earlier prima facie opinion to wind up private sector Devshree Cement as it was not possible to turn its net worth positive within a reasonable time-frame.

In December 1997, the board had formed a prima facie opinion of winding up the mini-cement plant and given the company promoters another chance to submit a revival scheme.

However, the bench found no seriousness on the part of promoters to arrive at an acceptable one-time settlement (OTS) with its secured creditors, a major route to cut interest burdens.

In a recent order, the bench said it cannot allow yet another opportunity to the

 

Rajasthan-based company to submit a revival proposal since the plant was not viable and their earlier proposal was nowhere near the acceptable levels.

The board said the company should be wound up in public interest under Section 20 (1) of the Sick Industrial Companies (special provision) Act, 1985.

Earlier, the company informed BIFR that it had offered an OTS to the banks and institutions but could not be implemented as the asset valuation could not be done till date. The company recently offered to get the asset valuation done within a week at its own cost.

The BIFR contended that Devshree Cement cannot be revived as the cement industry was going through a lean phase and mini-plants as such did not have much viability.

However, the company said the unit would manufacture alumina cement for which there was a good market. The company said the plant would become viable if the interest burden was brought down through OTS.

Moreover, it had already inducted Rs 1.24 crore under the revival scheme and expressed reluctance to accept failure at this stage. Both the State Bank of India and the Rajasthan Financial Corporation (RFC) said the company's OTS proposal fell well short of their expectations.

SBI's dues were stated at Rs 1.2 crore as the principal amount and Rs 92 lakh interest.

The Rajasthan Industrial Development and Investment Corporation (RIICO) also did not accept the company's OTS offer. It said the company offered only Rs 23 lakh while owing Rs 1.3 crore.

The bench further directed the RFC to give in writing about its ability to dispose off the company's assets.