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Journalism of Courage
MUMBAI, May 9: Swil Ltd is facing a major cost and time overrun for its copper project in Gujarat. The project cost of the company’s 50,000 tonnes per annum copper cathode plant along with a captive power plant has gone up substantially and it could not complete the project as per the original schedule.
The increase in project cost of Rs 131 crore was mainly due to the addition of captive power plant which was not envisaged earlier. Addition of certain new equipment (Rs 36.29 crore), increase in plant and machinery, building civil work etc (Rs 5.33 crore), increase in preoperative expenses (Rs 28.37 cr) and forex fluctuations (Rs 15.40 cr)also added to the cost escalation.
"In view of rising power costs as well as deteriorating power situation in Gujarat, the company has decided to install a captive power plant for the project. The increased project cost on account of inclusion of the captive power plant has been reappraised and accepted by the financial institutions," SWIL said in a faxed statement, adding, "there has not been any major cost or time overrun in respect of other projects earlier undertaken by the company."
The company is now planning to raise Rs 53 crore through a public issue and Rs 62.4 crore through a rights issue of fully convertible debentures. "The FCD has been designed to make it investor friendly. FCDs carry a coupon rate of 17.5 per cent for a period of 17 months from the date of allotment. Also the conversion into equity will be at 80 per cent of the average market price," the SWIL statement said.
The company’s balance sheet contains high level of sundry debtors. "The higher volume of sundry debtors is generallyon account of the tight liquidity position in the market. In fact, the higher level of sundry debtors is partially offset by higher levels of sundry creditors. The major loans were taken by the company relates to copper project and interest on such loans will be capitalised till the commissioning of the copper project. As such it is not likely to affect the company’s bottomline," SWIL said.
Besides, a winding up petition was filed by Anant Raj Industries, New Delhi in the Calcutta High Court against the company for alleged non-payment of dues of Rs 45.62 lakh. "A winding up petition was filed against us by Anant Raj Industries, for alleged non-payment of their dues. The claim made by them is disputed and we have denied our liability. The High Court has not admitted the winding up petition nor has any order been made on the same," the SWIL official said.
In September 1997, the Enforcement Directorate (ED) conducted a raid at the company’s official and residential premises allegedly for FERA violations byover-invoicing certain machinery imported from abroad for its copper project. "A search was carried out by the ED at our offices and residential premises of some of the executives. We deny any over-invoicing in case of machineries imported by us for the new project. The ED has also not issued any show-cause notice in this regard," SWIL said.
The company has defaulted in payment of interest on term loans from LIC, GIC and ICICI of approximately Rs 1.33 crore as on March 17, 1998. "Rs 1.33 crore shown as default in payment of interest in term loans to LIC, GIC and ICICI as on 31st March 1998 has since been paid," SWIL statement said.
As on February 28, ASIL Industries Ltd – a group company – has overdues of Rs 60 lakh to various banks. "The overdues of ASIL Industries Ltd with some of the banks are primarily on account of extremely adverse conditions and consequential tight liquidity position. A restructuring exercise is underway and it is expected that the bank overdues will be shortly paid," SWIL said.
