Texmaco sells Chenab Textile

CALCUTTA, June 17: Texmaco Ltd, the KK Birla flagship, has decided to sell Chenab Textile Mill at Kathua in Jammu to group company Sutlej I...

CALCUTTA, June 17: Texmaco Ltd, the KK Birla flagship, has decided to sell Chenab Textile Mill at Kathua in Jammu to group company Sutlej Industries Ltd. The mill is being run by Sutlej Industries, having been leased out by Texmaco for Rs 72 lakh a year.

In return, Sutlej Industries will transfer 3.5 lakh equity shares of Rs 10 each of Zuari Agro Chemicals Ltd to Texmaco. The new arrangement between Texmaco and Sutlej on Chenab will be effective from March 31, 1997. There will be no retrenchment and Sutlej will now pay the employees’ gratuity and all terminal benefits.

Texmaco president Ramesh Maheswari said the arrangement will not harm the interests of any of the companies. "Total assets of Chenab Textile Mills are more than sufficient to meet all liabilities. The scheme will not affect the rights of any of the creditors of Texmaco and Sutlej. Due provisions have been made for the payment of all the liabilites," Maheswari said.

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The scheme has been drawn up by chartered accountants KN Gutgutia & Co, after considering the fixed assets and liabilities of Chenab Textile Mills.In a notice to its shareholders, Texmaco has said it has decided to sell Chenab to focus on its core sectors – railway wagons, boilers, textile machinery, hydraulic structures, steel castings and other engineering products. The factories of Texmaco are situated in Belghoria, Agarpara, Sodepur and Panihati in West Bengal.

Sutlej Industries is engaged in the business of sale of cotton yarn and artificial fibre yarn manufactured and processed at its textile unit, Rajasthan Textile Mills at Bhawanimandi at Rajasthan.

The notice said: "Texmaco proposes to consolidate and expand its engineering products business, including diversification in other engineering for which growth potential is foreseen, and to modernise its said factories situated in West Bengal. Sutlej also proposes to expand its textile products business and to modernise the said Chenab Textile Mills."

"In the circumstances it is considered desirable and expedient to reorganise and reconstruct the respective businesses of Texmaco and Sutlej," the notice added.

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Texmaco sources said that the transfer of Chenab to Sutlej Industries will help Sutlej to raise more resources needed for its modernisation process. "The scheme will enable Sutlej to raise more funds for its modernisation and expansion plans because the fixed assets base of Chenab will be available to the company for raising loans or entering into other financial arrangements on the security of these fixed assets," sources said.

Apart from the factories at West Bengal and a textile mill at Jammu, Texmaco owns a textile mill and processing house at Delhi, four ginning and pressing factories at Malout in Punjab, Kesrisinghpur and Sangaria in Rajasthan and Fatehabad in Haryana.

However, the Delhi textile mill and processing house have been closed from November 30, 1996, by an order of the Supreme Court dated July 8, 1996.