Bilt To Shift Investment Unit In New Rejig

The Thapar group's flagship, Ballarpur Industries (Bilt), is planning to transfer its investments division to a wholly owned subsidiary, Janpath Investments & Holdings, as a major shift in its restructuring strategy.

The original plan envisaged spinning off the business into a new company, Bilt Investments & Services.

The proposed move is in response to demands from financial institutions, say top level sources in financial institutions.

"We were offered shares in Bilt Investments in lieu of our holdings in Bilt which we refused as we did not want to hold shares in an investment company. Subsequently, the company approached us with this proposal. In this case, the company in which we will hold the shares, Bilt Paper, will receive income from Janpath," FI sources said.

 

Institutions are yet to take a formal decision on the issue. It is, however, reliably learnt that they are favourably inclined over this move. The company failed to respond to a faxed questionnaire sent by Business Standard.

FIs not only have a substantial debt exposure to the company but are also one of the principal shareholders. Three institutions, Industrial Credit & Investment Corporation of India (ICICI), Life Insurance Corporation of India (LIC) and General Insurance Corporation hold about 24 per cent stake in the company. While ICICI holds about 3 per cent, the balance 21 per cent is held by the two insurance companies.

Last year, Bilt had chalked out an ambitious plan for the trifurcation of the company.

Under this scheme, three companies were to be carved out of Bilt - Bilt Paper, Bilt Chemicals and Bilt Investments. While the first company was to focus on the core business of paper, the second was to concentrate on the chemical business of Bilt.

Bilt Investments was to help identify new growth opportunities, and was also to serve as a vehicle for investments in various Thapar group companies.

The trifuraction was to come into force with retrospective effect from April 1, 1997. The restructuring was also expected to release about Rs 200 crore through the sale of non performing assets like real estate.

The entire restructuring programme was in response to the wish of creditor institutions. FIs were against Bilt existing as a conglomerate as they did not know where the money they had lent was being utilised. They did not know whether the money was being utilised in the paper, chemicals or investment business.

Later on, the institutions accorded approval to the transfer of the chemicals business to the new company, Bilt Chemicals.

A formal no objection certificate has already been issued by the institutions to Bilt. The transfer is to take place at a consideration of Rs 125 crore. Another Thapar group company, AP Rayon, will hold 65 per cent stake in Bilt Chemicals. The proceeds from the sale will be utilised for clearing a part of its outstandings amounting to Rs 95 crore.