Business Standard

Hinduja Foundries to approach BIFR

Image

BS Reporter Chennai

The Hinduja Group’s foundry arm Hinduja Foundries Ltd is planning to report to the Board for Industrial and Financial Reconstruction (BIFR) due to the erosion of net worth of the company. According to company’s annual report, the net worth dropped almost 55 per cent to Rs 185.18 crore in 2011-12 (18 months period)

While several attempts, through phone and SMS, were made to reach company’s Managing Director B Swam-inathan, he was not reachable. The company’s announcement to the BSE today stated that a meeting of the Board of Directors will be held on December 28, 2012, to consider reporting to the BIFR on the erosion of 50 per cent or more of the peak net worth of the company during the immediately-preceding four financial years by its accumulated losses as at September 30, 2012, pursuant to Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 and to comply the matters connected therewith.

 

According to company’s recent annual report, in 2011-12 (18 months period) company’s networth was Rs 185.18 crore as compared to Rs 408.52 crore, a year ago.

Rating agency ICRA in its report published in August, 2012, stated that due to several factors, including a sluggish demand for its castings, wage arrears settlement and provision for doubtful receivables, the company has been making losses in the last few quarters. In 2011-12 the company has reported a loss of Rs 291.34 crore as compared to profit of Rs 7.48 crore in 2010-11.

Company’s debt level has also increased with the availment of additional short-term borrowings to fund the loss. Interest costs for the 15-month period was Rs 90.53 crore, compared with Rs 34 crore in the previous 12-month period., said in the report.

According to company’s five year review, borrowed funds stood at Rs 673.36 crore as compared to Rs 570.57 crore, a year ago.

It may be noted, the company is planning to raise Rs 300 crore from its promoters including Ashok Leyland. “The scenario of continuous incurrence of losses, the company had constraints in obtaining long term fund from the marketô institutions to meet the expenditure including cash losses, which had to be met through working capital and short term loans,” the company said in a communication to its shareholders.

The company has decided to issue Non-Cumulative Convertible Preference shares for a total value of Rs 300 crore, which would be subscribed by the promoters of the company.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Dec 21 2012 | 12:39 AM IST

Explore News