A two-member bench of the Board, comprising chairman P P Chauhan and member G Narayanan, said the scheme had the consent of all the concerned parties.
The one-time settlement (OTS) proposal envisaged that the business of SAL would be converted into a new joint venture between Sidharth Shriram flagship Siel and Daikin Industries of Japan, called Shriram Airconditioning Private Ltd (DSAP). The role of the Japanese firm will be to supply the know-how.
Under the rehabilitation scheme, SAL will merge with the parent company, Siel Ltd, and all its loans will be paid in one installment within 15 days after the scheme is sanctioned by the Bench.
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The paid-up share capital of DSAP is estimated at Rs 19.5 crore. Of this, Rs 15.6 crore will be contributed by Daikin and Rs 3.9 crore by Siel in the ratio of 80:20 The business of SAL will be transferred to DSAP for a sum of Rs 13 crore. It was expected that consequent to the transfer of assets and business of SAL to DSAP and merger of SAL with Siel Ltd, SAL would cease to exist and the joint venture, which would absorb all workforce, would be healthy and a profit-making company.
The cost of the scheme has been estimated at Rs 13 crore. This includes Rs 8.6 crore as payments to creditors and Rs 3.9 crore towards the settlement of dues of Siel Ltd, besides targeting Rs 50 lakh as payment towards the voluntary retirement scheme.
"The IDBI would be the monitoring agency and the company will have to submit its audited balance sheet to the MA and the BIFR within three months of the date of the balance sheet," the Bench said in its order.
The Board said that the company and the promoters would comply with their commitments without waiting for the compliance by other agencies. It also noted that the company would not make any changes in its financial year and the basic accounting policy except those required in respective laws without the permission of the Board.
The order by the Board said that the takeover of the operations of SAL by DSAP is proposed to be implemented during 2000-01. DSAP will incur the operating loss of Rs 1.6 crore during the first year but will start earning profit from second year onwards, it said.