Government Bails Out Andrew Yule

In a major boost to the loss-making public sector undertaking Andrew Yule and Co Ltd, the government has sanctioned financial assistance of around Rs 39.49 crore to help the company tide over its acute financial crunch and turn around.

Consequently, against apprehensions, chances of the company being referred to the Board for Industrial and Financial Reconstruction (BIFR) have decreased substantially.

In the year ending March 1997, Andrew Yule had ended up with a loss of Rs 20 crore, which wiped out 100 per cent of the net worth of the company.

The present authorised capital of the company, which is Rs 20 crore, is proposed to be increased to Rs 75 crore.

 

The increase in the authorised capital of the company is proposed for issue of fresh equity shares to the central government in the name of the President of India in conversion of the financial assistance extended by the Union, into the equity share capital of the company.

Consequent to this, the central government has already released Rs 18.46 crore and the balance Rs 21.03 crore is expected to be provided in the latter part of the current year.

Under the circumstances, Andrew Yule will be required to issue 3,94,90,000 equity shares at par from time to time for a total face value of Rs 39.49 crore to the central government in the name of the President of India.

Sebi has already conveyed its approval to the proposed conversion of financial assistance upto Rs 11.68 crore into the equity shares of Rs 10 each. This will be a special resolution in the forthcoming AGM of the company.

According to the last years annual report, Andrew Yule had to struggle to arrange finance at a high cost from different sources for sustaining its activities. Thus, the heavy interest burden coupled with the usual increase in the various overheads and reduced contribution arising out of low off-take of orders had been responsible for the poor performance of the company.

Andrew Yules deposits from the public and others had amounted to Rs 13.35 crore as on March 31, 1997, out of which deposits totalling Rs 1.98 crore have been due for repayment.

The tea production has remained stagnant for the company over the last few years, while the operation of the Kalyani unit in the engineering division is taking a beating due to paucity of working capital.

Rationalisation of workforce through voluntary retirement scheme is in progress in the engineering division and the employee strength has already been reduced considerably.

The preparation and finalisation of the accounts for the year ended March 31, 1997 and the audit thereof could not be completed by September 30, 1997, by which the annual general meeting was supposed to be held.

Hence, the central government has extended the time for holding the annual general meeting till December 31, 1997.