Swc Plans Sale Of 4 Arms To Ease Debt Burden

Shaw Wallace and Company (SWC) plans to raise an estimated Rs 150 crore by sale of four of its subsidiaries, and properties, as part of the broads financial scheme to tackle the company's outstanding financial liabilities.

According to sources, the company's management has decided to sell of four of its subsidiaries -- namely the Colombo joint venture Shaw Wallace and Hedges, the consumer products division, Shaw Wallace Gelatines Ltd and the agrochemical business. Sale of certain properties is expected to fetch around Rs 10 crore.

These plans reflect an appreciable implementation of the Mckinsey report which had suggested these steps among others to bail the company out of its awesome debt situation. The company had hired the services of the global management consultant in June 1996.

 

The company's board of directors is expected to submit the financial plan before June 16, before the Company Law Board for grant of appropriate time for repaying the borrowings, say sources. The company's management is currently negotiating with different firms with the intention of appointing a merchant banker on a turnkey basis for assessing the exact liabilities of the company. It will be mainly appointed to advise the board and implement the financial plan drawn up.

The merchant banker's main task would be to focus on the non-core business areas of the liquor major and the most cost-effective way for raising funds for the company in the face of substantial liabilities the company is currently burdened with.

According to sources, the market performance of the company has picked up appreciably, as sales are on the upswing. A sum of Rs 100 crore is being generated as operating surplus from the liquor and beer divisions on an annual basis.

It has been decided that the company will follow a phased plan for repaying accumulated borrowings partly out of current profits, partly out of sale of certain assets and the balance from fresh infusion of funds. The board expects the payments to be completed within two-three years.

As regards the public deposits that are due, the board has decided that these be paid off on priority basis out of monthly profits of the company.

The audit for the company's accounts for 1995-96 is expected to be completed shortly.