Mystery Shrouds Swc Subsidiary'S Escape From Bifr Dragnet

The Calcutta-based liquor company Shaw Wallace has succeeded to pull its subsidiary Calcutta Chemicals out of the Board for Industrial and Financial Reconstruction (BIFR) dragnet by infusing Rs 8 crore in the company.

This leaves to question how the cash-strapped Shaw Wallace, which has failed to repay even Rs 1 crore inter-corporate deposits and currently battling around 60 winding up petitions, has raised such a sum.

A Shaw Wallace spokesman in Delhi when contacted by Business Standard claimed that the liquor firm is currently grossing profits of around Rs 10 crore per month.

The infusion of funds has been in the form of writing off the Rs 8 crore of outstanding dues and accumulated losses of Calcutta Chemicals, according to a company source.

 

The deregistration of the consumer products division from BIFR's purview follows the hearing held on August 19 and submission of accounts of Cal Chem for the fourteen month period ending May 31, 1996.

The order states that BIFR is satisfied that Cal Chem has ceased to be a sick company. It now has a positive net worth of Rs 1.3 crore.

It is pinning its hopes on the sale of the consumer products division (CPD), which it feels will raise Rs 50 crore and will be entirely used to repay its mounting ICD burden.

The Manu Chhabria company's ICD's, according to the company spokesman, currently stands at Rs 250 crore, inclusive of interest. Earlier, the company had claimed that it will clear its entire ICD burden by July next year.

The company has also been aided to an extent by a Calcutta high court order considerably lightening SWC's burden by stipulating that it will repay loans at lower than contracted interest rates in cases where winding up petitions have been filed against it.

What might make Cal Chem a more attractive takeover target is the fact that the division has now turned the corner, making nominal cash profits in its last accounting period.

The division had been put on the auction block earlier this year and a memorandum of understanding (MoU) with German multinational Henkel's associate in India, Henkel Spic India, was entered into for the sale of Cal Chem and Detergents India, which together make up the CPD.

However, the MoU was subjected to certain norms and it expired before the necessary clearances were obtained.

Shaw Wallace claims in a press release that announced the exit of Calcutta Chemicals from the BIFR that a number of Indian as well as multinational companies have evinced interest in buying the CPD. It also says that it is open to renegotiations with Henkel.