Raunaq Singh Sees Accruals Funding Bst Revival

Raunaq Singh (left), chairman of the Raunaq group of companies, is confident of meeting the cost of reviving Bharat Steel Tubes (BST), the parent company of Apollo Tyres, from internal resources.

But BST has accumulated outstandings worth nearly Rs 80 crore. And the only company in the Raunaq Singh stable that is making an operating profit is Bharat Gears. All the other companies, which include Raunaq Automotive Components, are incurring losses.

The creditor institutions to BST had earlier agreed to the revival strategy framed by Apollo Tyres -- controlled by Raunaq's son Onkar Singh Kanwar -- and had decided to waive the penal interest on BST's dues.

 

Kanwar was obliged to pay BST's debt since he had given personal guarantee against the loans borrowed by the company. Apollo, in fact, has set aside Rs 40 crore in the current year to rehabilitate BST. But if Raunaq Singh's plan is approved by BST's operating agency, Industrial Finance Corporation of India (IFCI), and the Board for Industrial and Finance Corporation of India (BIFR), it will help Apollo to boost its operating profit by the unutilised Rs 40 crore.

Raunaq Singh told Business Standard that he would place his strategy for BST on March 7. But it must first be ratified by IFCI.

BST has been lying closed for the past several years and it has also forfeited its entire stake in Apollo Tyres owing to non-payment of loans the company borrowed by pledging the shares of Apollo Tyres.

And Apollo Tyres at present is virtually controlled by Onkar S Kanwar, who holds about 25 per cent of the company's equity and is its vice-chairman and managing director. Though Raunaq continues to be the company's chairman and managing director, he has neither any stake nor any executive powers in it.

PNB and IFCI had earlier agreed to Apollo's revival plan for BST and had decided to waive the penal interest on the accumulated debt.

Further, the institutions were planning to convert the outstanding amount owed by BST into equity, if Apollo decides to take over BST. Apollo Tyres, on its part, had to inject Rs 30 crore into BST (which is the equivalent amount BST owes to PNB and the amount the bank plans to convert into equity).

This would have made PNB and Apollo Tyres Ltd an equal partner (roughly 40 per cent each) and the largest shareholders in the refurbished Bharat Steel Tubes Ltd.

An Apollo Tyres official said it had already made advance marketing arrangement for BST's steel tubes. But he pointed out that if Raunaq wishes to turnaround BST, Apollo would have no objection.