Fichtel Presence Enhances Sirmour Sidburg Viability

The viability of the ailing Sirmour Sidburg Auto (SSAL) is certain with the coming in of the worlds largest manufacturer of shock absorbers,

Fichtel and Sans AG (F and S) of Germany, as its promoter, a Board for Industrial and Financial Reconstruction (BIFR) appointed operating agency has assessed.

With the coming in of the new promoters, who enjoy a good reputation in the international market, the viability of the unit would be certain and there need not be apprehensions in the mind of the bankers, the operating agency, Industrial Credit and Investment Corporation of India (ICICI) said during the recent BIFR hearing.

 

During the hearing, the bench invited suggestions and objections in response to the draft rehabilitation scheme issued earlier. As the matters raised were not of a very serious nature, the BIFR sanctioned the scheme with slight modifications.

According to the sanctioned scheme, Fichtel will pick up a major stake in Sirmour Sidburg.

Under the Rs 21-crore revival package, F and S will bring in Rs 16.06 crore by buying equity shares of SSAL at a premium of Rs 35 per share and have a stake of 51.1 per cent in the company.

The preferential allotment would result in the company being converted into a joint venture and the name of the company would be changed to Sachs Sirmour Ltd.

According to the scheme, SSAL would incur a capital expenditure of Rs 7.4 crore for upgrading the existing facilities as well as setting up of new facilities to manufacture shock absorbers for four-wheelers.

The capital expenditure would help in increasing its existing capacity from 2.4 million to five million per annum for two wheelers and five million for four-wheelers by March 1999.

The commercial banks have agreed to release working capital to the tune of Rs 2.2 crore.

SSAL would be exempted from the Sebi guidelines for the proposed preferential placement subject to the condition that public holding should not fall below 20.9 per cent in the company.