Benson Overseas Holdings Ltd, a United Kingdom-based venture capital firm, will take over the ailing Baroda Rayon Corporation Ltd, one of the oldest nylon and rayon manufacturing companies in India.
An agreement to this effect was signed recently in Vadodara by Baroda Rayon chairman Pratapsinh Gaikwad, Benson executive director Bipin B Shah and president of the company's trade union, Sharad Rao. Benson is run by a group of overseas Gujaratis.
Though the financial details of the agreement are not known, Baroda Rayon has over Rs 500 crore (Rs 5 billion) of accumulated losses and all its four plants were closed down 18 months ago, rendering over 3,000 workers jobless.
Under the agreement, the company's plants will be reopened in phases by June 2004. The new management will also be free to sell the surplus land to repay the dues of banks and financial institutions.
D C Gandhi, a leading industrial lawyer in Gujarat who played a pivotal role in the signing of the agreement, said the parties concerned would submit the proposal before the Gujarat high court next week. The company would be run by professional managers, Gandhi said.
Employees will be paid according to the terms of the settlement. The company would also bear the Rs 6.61 crore (Rs 66.1 million) provident fund liability and the Rs 1.73 crore (Rs 17.3 million) payable towards ESI dues, Gandhi said.
The agreement also says that the new management will not close down any business "with the purpose of retrenching employees."
Baroda Rayon stopped functioning in March 2002. At the end of 2001-02, the company's net sales stood at Rs 92 crore (Rs 920 million), while the losses were Rs 44 crore (Rs 440 million). The company made a 1:1 rights offer at Rs 15 per share in April 1997 but the offer was undersubscribed.
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