Kilburn Engineering, a part of the Williamson Magor group, has decided to sell its Vadodara plant in Gujarat to the Cryogenic group of the US for around Rs 11 crore (Rs 110 million).
The two sides have entered into a memorandum of understanding to this effect. The proceeds of the sale will be used to retire a part of the company's Rs 40 crore (Rs 400 million) outstandings to banks and financial institutions.
"The due diligence exercise has been completed and the sale is expected to be through in about a month," sources in the lenders consortium said.
V R Sinha, managing director of Kilburn Engineering, declined to comment on the proposed sale. The company has another plant at Bhandup in Mumbai which will continue to be with it after the sale of the Vadodara plant.
Kilburn specialises in design, engineering, manufacture, project management, and field installation of turnkey packages of a number of process plants, equipment, and systems in the area of heat and mass transfer. Its major customers are in the core sector industries such as petrochemicals, fertilisers, chemicals, refineries, oil &gas and food processing.
Thecompany was doing well till the late nineties. It began defaulting on its lenders commitments from 1998-99 onwards, institutional sources said.
Thecompany's top line was hit as sales fell due to the general recessionary conditions in the economy. Further, the bottomline was hit due to rise in input costs primarily incurred for setting up the Vadodara plant.
Kilburn Engineering reported a complete erosion of its net worth for the 18 month period ended September 30, 1999, and made a reference to the Board for Industrial &Financial Reconstruction.
The board declared it a sick undertaking in November 2000and appointed the Industrial Development Bank of India as the operating agency.
The board in its December 31, 2002,order ruled that if the company decided to go ahead with its sale of the Vadodara plant, it shall enter into a voluntary retirement scheme settlement with both the workers and the officers association.
Thecompany is at present in the process of entering into a VRS settlement.