The delay in the sale of subsidiary Calcutta Chemicals is proving a costly affair for Shaw Wallace and Company Ltd.
The company is footing a loss of nearly Rs 1 crore a month with the sale not coming through for long.
Since Shaw Wallace had resorted to raising money through inter-corporate deposits at over 25 per cent interest, the delay in the sale of the consumer products division is believed to have affected the companys bottomline.
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The deal has to come through in another three months, within which the company has to finalise its accounts for the fifteen month period, Shaw Wallace sources said.
The revised terms of offer of the consumer products division was settled at Rs 42 crore with Henkel-Spic making a certain down payment upon signing the memorandum of understanding and the initial agreement.
Sources said the company was making an attempt to reduce the huge interest burden by repaying the debts piled up in the form of inter corporate deposits.
The sale of Calcutta Chemicals is important to Shaw Wallace as it may help the company raise deposits to pay for its mounting ICD liability.
The companys board constituting the CLB nominees, L C Gupta and S K Hazari have approached Coopers and Lybrand for assessing the true valuation of the consumer products division.
The foreign consultants would decide on the price consideration reached earlier between Shaw Wallace and Henkel-Spic combine.
The hiving off of the consumer division had been on the cards since a long time with buyers like Hindustan Lever and P&G approaching SWC earlier before Henkel initiating negotiations.
The deal, however, has been delayed with the liquor major being riddled with mounting ICDs and various winding up petitions against the company. The negotiations for the sale were halted following various litigations against the company by a petition launched by the employees federation to the company law board.
Further embroiled with controversy, SWC had to pass through rough times with the enforcement directorate having slapped charges against the company on various charges of foreign exchange violations along with raids conducted by the income tax authorities.
All these activities temporarily withheld the sale of the consumer products division. The final CLB hearing on the issue of inducting eight government directors on board is slated to come up next week.
It is not exactly known whether the government nominees who have been brought to execute the sale of Calcutta Chemicals would continue to remain after the final deal with Henkel is completed.