The Cabinet Committee on Economic Affairs (CCEA) today approved the financial restructuring plan of Andrew Yule Company Limited (AYCL) involving conversion of outstanding Government of India (GOI) loan of Rs.41.52 crore into equity, waiver of interest of Rs.33.43 crore accrued thereon, waiver of differential interest arising out of reconciliation of books of accounts of the company and Pay and Accounts Office of Rs.5.56 crore and writing-off accumulated losses of AYCL against GOI`s equity share capital of Rs.12.95 crore.
The proposal approved by the CCEA will be referred to Board for Industrial and Financial Reconstruction (BIFR) for approval and thereafter will be implemented within a period of six months.
Conversion of outstanding GOI loan into equity and waiver of interest will ensure availability of increased working capital required for the enhanced targeted business volume of the company, and help increase growth and profitability of the company.
Writing off of accumulated losses of AYCL against GOI`s equity share capital, as per Secuerities and Exchange Board of India (SEBI) guidelines, will ensure better price for AYCL shares at the time of disinvestment.
The approval does not entail any financial outgo from the exchequer. It involves the conversion of loan into equity, waiver of interest and write off of equity against accumulated losses of the company.
a) AYCL was established in 1863 and became a Public Sector Enterprise in 1979. AYCL is engaged in manufacturing/ production of bulk tea, industrial fans, ventilation equipment, air pollution control equipment & systems, effluent treatment plants, power & distribution transformers, high tension and low tension switchgears and circuit breakers, auto voltage regulators and allied equipments.
b) The restructuring scheme sanctioned during 2007 has been substantially implemented and AYCL has been earning profit since 2007- 08 and the net worth of the company has turned positive since 2008-09. The company has paid back the entire GOI restructuring loan of Rs.87.06 crore sanctioned as a part of the restructuring scheme during 2010, through disinvestment of its subsidiaries Phoenix Yule Limited (PYL) and Dishergarh Power Supply Company Limited (DPSC). Though the company had turned around and has been earning profit every year, it has accumulated loss of Rs.39.18 crore as on 31.3.2012, GOI loan (towards payment of salary and wages) provided during 2007-08 – Rs.41.52 crore and accrued interest on GOI Ioan – Rs.33.43 crore.