Industrial Credit and Investment Corporation of India Ltd (ICICI) and the Industrial Investment Bank of India (IIBI) and the State Bank of India have extended financial assistance to ITC Bhadrachalam Paperboards Ltd to part-finance the company's expansion project at Andhra Pradesh and for general corporate purposes.
The company has also made a private placement of non-convertible debentures aggregating Rs 66 crore with various debenture-holders and has appointed the Industrial Development Bank of India as trustees for the debenture-holders.
While ICICI has sanctioned a medium term working capital loan of Rs 25 crore and a rupee term loan of Rs 22 crore, the State Bank of India sanctioned a foreign currency loan of $ 3 million to the company. The Industrial Investment Bank of India too has extended a sum of Rs 25 crore loan under the equipment finance scheme. The company suffered a Rs 48.96 crore net loss in the financial year 1997-98. To tide over its present crisis and get itself back on the rails through a revival plan, ITC Bhadrachalam has approached its lenders for financial assistance by way of re-schedulement of the project loans, other long term debt and staggering interest rates. Though formal sanctions are still awaited, the financial institutions and lenders have indicated an in-principle support to the company after going through the revival proposal.
It had also sought financial assistance from its parent company ITC Ltd and its subsidiaries through an offer of 1,91,20,000 equity shares of Rs 10 each for cash at Rs 65 per share and 11 per cent 25,72,000 redeemable cumulative preference shares of Rs 100 each for cash, which will be redeemed in seven years.
The investment has already been approved by the directors of ITC Ltd and its shareholders and will now be tabled at the forthcoming annual general meeting of ITC Bhadrachalam. According to the corporate review for 1997-98, the price for the company's equity share would be about Rs 34 per share if the formula prescribed by the Securities & Exchange Board of India for determining the issue price of preferential offer of shares is presently applied. The shareholders' approval for the offer would change the shareholding pattern of the company with holding of ITC and its subsidiaries in ITC Bhadrachalam increasing from 37 per cent to 51 per cent, thus transforming the associate company into a subsidiary.
Financial institutions, nationalised banks, insurance companies and public sector mutual funds holdings would, however, reduce to 30 per cent from the existing 38 per cent. The public and foreign institutional investors shareholding would also reduce to 17 per cent and 2 per cent respectively from the present corresponding 22 per cent and 3 per cent. To facilitate the issuance of the offer, the company has sought shareholders approval to increase its authorised share capital from Rs 77 crore to Rs 150 crore.
ITC Bhadrachalam had embarked on a Rs 675 crore expansion cum modernisation programme. The project capitalisation of Rs 675 crore against the earlier cost estimate of Rs 524 crore includes the impact of increased automation, expanded civil construction, higher cost of capital goods import due to depreciation of the rupee and time overrun.
However, the commencement of commercial production coincided with difficult business environment, thereby, adversely affecting the company's performance.
The company's subsidiary ITC Bhadrachalam Finance & Investments Ltd registered a Rs 42.77 crore for the fiscal 1998. The company has been unable to identify a partner or a buyer for its subsidiary. Meanwhile, P Dhobale has been appointed as the deputy managing director of the company.
