Kirloskar Electric amends revamp plan

The revamped Kirloskar Electric has managed to further amend its restructuring package.

According to the new terms, the company has received an 18-month moratorium for its principal repayment. The interest rate has also been slashed by over 400 basis points from the earlier 12.5 per cent. As a result, it is now 8 to 8.5 per cent on term loans and working capital.

The company, which calls this the second part of the restructuring package, has said that it will now begin interest repayments based on the amendments.

The new package stipulates that interest payments, post-restructuring, will start this month and span over the next 5-7 years. However, as a result of the moratorium, the principal repayment has been rescheduled to October 2005 from April 2004.

"Our bankers have given an in-principal approval to the amendments. The final ratification can be expected in the next 3-4 months after their top management give a go ahead," Vijay R Kirloskar, chairman and managing director, Kirloskar Electric, said.

The company, along with its demerged entity Kaytee Switch Gear, now carries a debt (term loan, funded interest and working capital) of about Rs 137 crore.

According to deputy managing director P S Malik, the package initially had mandated the company to start interest repayments from October 2002 and principal payback from April 2004. Back then, the plan called for a repayment over 20 quarters or five years.

The package in itself has now been extended by 18 months as the court approval came only in February 2003 and not in September 2001 as envisaged by the first restructuring plan.

Also, the time-frame has been widened to 5-7 years from the earlier five years. This is to allow the company repay the interest accrued from October 2002 in the extended period.

The restructuring package approved in February 2003 split KEC into three entities, in a bid to put the Rs 315 crore debt-laden company on track by unlocking the undervalued assets of the company, and make it's net worth positive.

This move, carved out from KEC a special purpose vehicle (SPV), Best Trading & Agencies and Kaytee Switchgear (that focuses on motors, generators and traction components). The plan revolved around the self-liquidating SPV on which a Rs 148 crore of debt was transferred.