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BIFR sanctions revival scheme for Orissa Drugs and Chemicals

Richa Mishra

NEW DELHI, Feb. 25.

THE Board for Industrial and Financial Reconstruction (BIFR) has sanctioned a Rs. 9.22-crore revival scheme for Orissa Drugs & Chemicals Ltd (ODCL) jointly promoted by Indian Drugs & Pharmaceuticals Ltd (IDPL) and Industrial Promotion and Investment Corp oration of Orissa Ltd (IPICOL).

The scheme is based on the rehabilitation proposal submitted by UAS Laboratories, Minnesota, US (UAS). The scheme envisages acquisition of all the equity shares of ODCL by UAS at a price of Re. 1 per share.

The scheme calls for induction of Rs. 7.99 crores by UAS as promoters' contribution and continuation of services of the existing workers and staff through redeployment.

The contribution of the intending promoters, UAS, will be through equity (Rs. 3.35 crores), interest-free unsecured loan (Rs. 4.49 crores) and payment to existing shareholders (Rs. 15 lakhs). The proposed promoters' contribution works out to 87 per cent of the cost of the scheme.

According to the scheme, the one-time settlement (OTS) of dues of secured lenders will be over a period of three years. Further, it also envisages increase in the authorised share capital of ODCL and issue of shares at par to IDPL and IPICOL, against the share application money within 60 days from the date of sanction.

The revival scheme also provides for capital expenditure of Rs. 2.60 crores on acquisition of balancing equipment and expansion of product range. Once operations are stabilised, UAS proposes to undertake major expansion-cum-modernisation during the third year, at an estimated cost of Rs. 2 crores. This would enable the company to diversify into high value-added products.

UAS also proposes to evolve a dynamic marketing strategy with emphasis on retail marketing through its own professional marketing team.

Further, orders of Rs. 2 crores from the State Government during the first year are envisaged in the scheme with an increase of 10 per cent per annum. From the third year, UAS will utilise its experience abroad and commence exports of ODCL's products.

The dues of secured lenders are proposed to be settled through OTS by payment of Rs. 3.35 crores, while Rs. 1 crore will be paid as down-payment within one month of the sanction of the scheme.

The remaining amount will be paid in 12 equal quarterly instalments commencing three months from the date of down-payment.