Yet another Bangur company is headed for the sick bay. This time, it's the K K Bangur-controlled GKW Ltd. Shree Synthetics and Fort Gloster of the Shreekant Bangur and Shree Kumar Bangur groups, respectively, have already gone to the Board for Industrial and Financial Restructuring (BIFR).
GKW Ltd, the diversified engineering company, is going to be referred to the BIFR within a fortnight as its accumulated losses have completely wiped out the net worth.
Although industry sources are sceptical about an expeditious turnaround of the company once it is referred to BIFR, the top management is confident of a speedy revival.
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A top GKW source said, "The management has decided to prepare a revival strategy within six months -be it within or outside the purview of BIFR."
He added that in order to make the company totally debt-free, a massive "bypass surgery" was required first to hive off real estate, huge inventories, non-viable units and projects.
He also said that GKW was open to spinning off its unviable units into separate entities and scout for joint venture partners or outright sell them, since they were a drag on the company's bottomline.
The GKW management has so far failed to sell the cement and Powmex Steels divisions which are on the block for quite some time.
"Talks with some parties for both the units are on. Nothing concrete has so far been emerged," the source said.
In any case, the proceeds of the "non-production assets," he said, would take care of the company's debt burden, currently pegged at over Rs 150 crore.
Had there been no interest burden, even then the company, which incurred a Rs 75.90 crore net loss last year, would not have registered an operating profit. It shows that a re-look is required at the company's productivity, the source said.
GKW's production level should be raised to put the heavily losing company back on the rails by introducing efficient technology or managing the huge 4,500 workforce properly.
According to the sources, the company's operations have been severely affected in the past three years owing to several factors including liquidity problems faced by end-user industries, pressure on margins and easy availability of cheap small scale substitutes.
Automobile industry and commercial vehicles segment, which constitutes a major market for GKW products, has been experiencing a negative growth over the past couple of years, the sources added.