KEC Intl kicks off balance sheet revamp

Plans to spin off unsecured loans into a separate firm

KEC International, a RPG Enterprises company, has embarked upon a financial restructuring. As part of the revamp, KEC may spin off its unsecured loans into a separate entity. The board will meet early next week to finalise the details.

Sources close to the development said KEC is examining the option of separating unsecured loans, or at least a portion of it, from the main business.

"In case the board approves the spin-off, the company will be able to separate nearly Rs 400 crore from its balance sheet. It will help KEC to have a better balance sheet," they added.

The move, if adopted by the board, would allot shares of the new entity to existing shareholders of KEC, they said adding that nothing has been finalised on the issue yet.

An RPG Enterprises spokesperson said: "The KEC board will meet on March 22 to consider the scheme of arrangement envisaging the restructuring of businesses of the company and its subsidiary. We can't comment on anything beyond this."

According to the annual report for 2003-04, net unsecured loan stood at Rs 405.19 crore.

This includes inter-corporate loans and advances of Rs 278.19 crore and dues from subsidiary companies.

Experts said the proposed financial restructuring, which will essentially clean up the balance sheet, is a precursor to attract institutional investors.

The share price of KEC reached its 52-week high of Rs 185 on Monday on the Bombay Stock Exchange. The stock today closed at Rs 181.25, 2.75 per cent higher over its last close.

The Rs 827 crore company, which posted a net profit of Rs 25.17 crore last year, has a strong order-book. It has received a new order of Rs 69 crore today from Power Grid Corporation.

A major player in the transmission market, KEC is executing various orders for Power Grid, Powerlinks Transmission, West Bengal State Electricity Board, APTRANSCO and J&K SPDC.