The Board for Industrial and Financial Reconstruction (BIFR) has sanctioned the draft rehabilitation scheme (DRS) on Rico Agroils Ltd (RAL) which provides for the company's merger with Rico Automobiles Industries (RAIL).
RAL-appointed chartered accountant S S Kothari & Co has assessed the value of shares of RAIL and RAL at Rs 65 and Rs 1, respectively. However, in order to avoid fractional shares, the management of the two companies have proposed a share exchange ratio of 1:50.
The promoters hold about 36 per cent of equity in RAL and about 46 per cent in RAIL. Institutions or banks do not have any share holding in either of the two companies.
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The cost of the scheme is set at Rs 14.02 crore and this will be financed through long-term loans and internal accruals of RAIL to the tune of Rs 1.75 crore, Rs 6.88-crore income tax benefits, Rs 1.50 crore unsecured loan from Hero Honda Finance Ltd, Rs 2-crore additional unsecured loan from group companies and internal accruals of Rs 1.89 crore. Additional unsecured loans of Rs 2 crore would be brought in from group companies Rico Castings and Kapsons Associates Pvt Ltd which have a combined net worth of Rs 3.16 crore and an annual turnover of Rs 12.37 crore as on March 31, 1998.
According to the scheme, IFCI and banks would sacrifice Rs 10.92 crore under various heads which include waiver of compound and penal interest/ liquidated damages and waiver of 17 per cent of simple interest up to December 31, 19