The beleaguered Rajasthan state owned firm Jaipur Metals and Electricals Limited is all set to go to private hands following the directives given by Company Law Board.
As per the CLB order, the majority stake of this electrical meter manufacturing company would now be transferred to UK quoted company Dhir and Dhir Asset Reconstruction and Securitisation Company Limited by the month end, which had purchased all debts of JMEL from IDBI in 2007.
With the new system in place, the shareholding of labourers, which was around 60% has come down 29%. The state government, which had 20.23% stake in the company will have a mere 9.9% while financial institutions too will have 9.9% holding in the company.
Mr Prateek Kasliwal a JMEL advocate said that “JMEL had taken loan of around INR 3.5 crore from IDBI in 1995. Under the terms of agreement, on the condition of default, IDBI was entitled for 51% stake in the company and would have two representatives on the board of directors. In 2007, Dhir and Dhir Asset Reconstruction and Securitisation Company Limited acquired the debt liability from IDBI and claimed for majority stake in the company. The board of directors didn’t agree and turned down Dhir and Dhir’s claim by saying that the agreement with IDBI doesn’t stand valid with DDARSCL.”
The CLB order has also given a big jolt to the company’s revival plan chalked out by the state government after the intervention of Rajasthan High Court in June 2008. The state government had commissioned Jaipur based Genus Power Infrastructure Limited to make it into a financially viable company. Reacting sharply to it, DDARSCL approached the CLB and stalled the revival process.
JMEL has been a profit making company till 1995. The Company has been incurring operating losses from the year 1996 and due to unviable market conditions, deteriorating financial position and continuous losses, the production of JMEL was closed down in February, 1998 when it had accumulated losses to the extent of approx INR 60 crore.
(Sourced from Economic Times)
