Cloud Over Swc Revival, Board Meet On June 25

The board of directors of the Manu Chhabria-controlled Shaw Wallace and Co Ltd (SWC) will have a crucial meeting on June 25 to consider the accounts for year ended June 30, 1996, against the backdrop of a major threat to its financial restructuring plan from employees of the company.

The board meeting would be preceded by a meeting of the companys audit committee on June 23. The deadline agreed to by the company before the Company Law Board (CLB) on finalising the accounts was June 30, 1997.

In another important step forward, the company has also filed an affidavit before the CLB earlier this week detailing the status of compilation of the financial results. SWC had also agreed to hold its 50th annual general meeting on or before August 14, 1997.

 

However, the biggest challenge now facing the company is to prevent the financial plan drawn up by the board from being short-circuited. SWC, sources said, fears that the employees federation, which has consistently opposed any move by the company to disinvest from certain businesses, would put in applications before the courts to stymie the financial restructuring plan which entails such disinvestments. Sources said the company felt that given the lengthy legal procedures, if the employees were to take fresh legal initiatives, the financial problems of the company would be far from over despite the boards revival plan.

The SWC management had initiated an unpublicised dialogue with the employees federation last month but things do not seem to have made much headway despite the talks.

Divestment from non-core businesses forms the hub of the SWC financial restructuring plan which was approved by the board recently. The plan envisages a phased repayment of accumulated borrowings partly out of current profits, partly from the sale of certain assets, and the balance from fresh infusion of funds. With strong current earnings, the SWC board was confident of being able to pay off all outstanding within two to three years.

When contacted, a SWC spokesperson said it was regrettable that the employees federation should continue on a warpath even after repeated assurances by the management that the surplus staff at Calcutta, to a very large extent, would be redeployed at other locations.