The Cabinet Committee on Economic Affairs (CCEA) on Wednesday allowed public sector enterprise Andrew Yule & Co. to issue its equity shares to Bank of Baroda against its working capital loan worth Rs.29.91 crore borrowed from the bank.
The CCEA, chaired by Prime Minister Narendra Modi, has given its approval for conversion of working capital term loan amounting to Rs.29.91 crore from Bank of Baroda (BoB) into equity by issuing requisite number of equity shares of Andrew Yule & Co. Ltd. (AYCL) as preferential issues to BoB as qualified institutional buyer, a statement said.
The statement said the price would be based on market price determined as per guidelines of the Securities and Exchange Board of India (SEBI) on date of acquiring of shares by BoB.
The conversion of loans into equity would bring down the cost of debt servicing of Kolkata-based enterprise by Rs.2.86 crore per annum.
"This will be implemented within a period of three months," it said.
This is expected to increase growth and profitability of Andrew Yule and in turn is likely to translate into better share price of the company at the time of further disinvestment of the Centre's shares in the company.
As part of implementation of financial restructuring scheme, BoB extended a loan of Rs.52.49 crore to the company in 2009. Of this, Rs.29.91 crore was working capital loan. The power equipment maker proposed conversion of the loan worth Rs.29.91 crore taken from BoB into equity.