CCEA approved Andrew Yule proposal to convert Bank of Baroda loan into equity
Posted on:07 Apr 2016 14:22:48
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07 April 2016 Current Affairs: The Cabinet Committee on Economic Affairs (CCEA) on 6 April 2016 cleared conversion of Working Capital Term Loan (WCTL) of Bank of Baroda's (BoB) 29.91 crore rupees loan to Andrew Yule & Co. Ltd. (AYCL) into equity shares.The approval was granted during the CCEA meet chaired y Prime Minister Narendra Modi.The price of equity shares will be based on market price determined as per Securities and Exchange Board of India (SEBI) Guidelines on the date of acquiring of shares by BoB with face value of 2 rupees per share.This conversion of WCTL will pave the way for disinvestment of the Kolkata-based PSU in the next three months. The conversion of loan to equity would help bring down the cost of servicing of debt by 2.86 crore rupees per annum, resulting in improved profitability and liquidity of Andrew Yule in coming years.This will provide an opportunity to finance working capital needs of existing and new businesses. It will also result in improved Debt Equity ratio for AYCL and will enhance the strength of its balance sheet.AYCL was established in 1863 and it became a Public Sector Enterprise in 1979. It is presently engaged in manufacturing of Industrial Fans, Ventilation Equipment, Power & Distribution Transformers and allied equipment and production of Bulk Tea among others.Paid up capital of the Company is 66.73 crore rupees in which Union Government holding is 87.98%. AYCL shares (Face value of 2 rupees each) are listed in Mumbai Stock Exchange.As a part of implementation of Financial Restructuring Scheme recommended by the Board for Reconstruction of Public Sector Enterprises (BRPSE) in 2007, Bank of Baroda extended a loan of 52.49 crore rupees to AYCL in 2009, out of which 29.91 crore rupees was Working Capital Term Loan.With the approval of its Board of Company, AYCL has proposed for conversion of WCTL of 29.91 crore rupees it has taken from BoB into Equity.
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