Videocon International has taken on arch rival BPL by filing an appeal with the Board for Industrial and Financial Reconstruction (BIFR) against the latter over its alleged violation of its order for rehabilitation of the Uttar Pradesh government-owned Uptron Colour Picture Tubes.
Videocon International has petitioned the BIFR seeking directions against BPL Ltd after taking legal counsel in the matter over its role in Uptron Colour Picture Tubes Ltd, the public sector undertaking promoted by the Uttar Pradesh Electronics Corporation. Videocon has charged BPL with failing to inform it about the expansion of the equity capital base at Uptron which would require investment from Videocon and thus would make it a shareholder.
However, a senior BPL executive maintained that according to the BIFR order, which required the equity base of UCPTL to have first been written down from Rs 42.49 crore to one-tenth and then subsequently raised to Rs 40 crore, Videocon was to pump in its equity investment by a stipulated period. Videocon had to bring in its share of equity of Rs 7.5 crore within one year, i.e. by April 1997. Since they failed to do so, they have no locus standi in Uptron any more, explained the BPL executive, who added that Videocon only showed some interest in Uptron after trial runs began in May this year.
As a result, he maintained, BPL has been forced to bring in additional equity and thus now holds 76 per cent in UCPTL, with public and financial institutions holding the balance. We do not think we have violated the BIFR order, he said. However, Videocon feels that BPLs action might be a violation of the BIFR award that had directed BPL to involve Videocon in the project by expanding the equity base of the company.
PN Dhoot, managing director Videocon International, said: As BPL is the implementing authority in the Uptron case as per the BIFR order, it is for them to inform us of the necessary share allotment. We have been ready with funds, but we cannot give them any cheque unless they inform us of the share capital expansion. A Videocon executive said: BPL is going on its own in the venture.
We have not been allowed to pick up our share of the equity capital by BPL and are not part of the management at Uptron either. UCPTL, which was a state government owned sick public sector undertaking, was awarded to the combine of BPL and Videocon by the BIFR last year.
The Rs 228.23 crore worth scheme, which was sanctioned in April 1996, had allowed the merger of the state-controlled Uptron Colour Picture Tubes with the Nambiar-promoted BPL Ltd, but had directed that the companys equity base should first be reduced to one-tenth, and subsequently expanded to about Rs 40 crore by including Videocon International and Toshiba as equity partners.
According to the scheme, the share capital of Rs 42.49 crore of UCPTL, of which public holding was about 10 per cent, was to be written down to Rs 4.24 crore.
Thereafter, the equity would be increased through contributions by BPL, Videocon and Toshiba and also by conversion of some portion of the debt of institutions and banks as detailed in the scheme, which would reduce the public holding to less than 3 per cent. After the expansion, BPL was to hold about 51 per cent of the equity stake, Videocon about 20 per cent, Toshiba and Mitsubishi together about 25 per cent.
However, Toshiba is believed to have already communicated to BPL its intention of not picking up its 10 per cent equity stake in Uptron. It was earlier supposed to contribute Rs 3.75 crore in the expanded equity capital of UCPTL.
Mitsubishi, which was a technical cum equity partner of UCPTL when it was promoted by the UP government owned UP Electronics Corporation, now has a minuscule shareholding in the company.
