DECKS CLEARED FOR TRAYONS TAKEOVER

Government decides to settle dues of employees of Travancore Rayons

The government has decided to settle the dues of employees of Travancore Rayons Limited, Perumbavoor.

The decision was made at a State Cabinet meeting held on Wednesday.

Once the financial liability of over Rs.30 crore on the labour account is settled, the company could be entrusted to Kinfra, as had been planned earlier. Agreements had already been reached to settle the dues to banks and financial institutions. The move will enable the government to launch a new venture at the site of the industry.

Concerted attempts made by a united forum of trade unions as well as people’s representatives have yielded result though it involved a huge delay. There were several unsuccessful attempts to hand over the unit to private entrepreneurs. A few companies which came forward initially failed to satisfy the government’s terms. The present move initiated by the government too had faced several hurdles.

The rayons unit, manufacturing bio-degradable cellulose-based viscose filament yarn and cellulose fibre, which started production in 1950, had been running profitably till 1974. Continuous power cuts and inability in meeting the marketing challenges made the unit unviable. Banks and financial institutions had extended loans under guarantee from the State government. The government owns 37 per cent of shares of the company.

The company was locked out in 1984 and reopened two years later, but was soon referred to the Board for Industrial and Financial Reconstruction (BIFR). A rehabilitation scheme sanctioned by the BIFR in 1989 was implemented by the State government and a consortium of financial institutions and banks. The scheme failed, and the BIFR referred it to the Kerala High Court for winding up the company. Efforts by the company management and trade unions to reverse the BIFR order failed to bear fruit. It led to an increase in liability exceeding Rs.100 crore.

The lenders wanted to rope in a promoter for the company. The NDEE group and Elanjikkal group came forward, but could not succeed in striking an agreement. The court ordered wind-up in December 2008, which was suspended later to provide another opportunity for revival. UAE-based Midland group expressed interest, but abandoned the proposal later. The government ultimately decided to take over the unit and discussions had been going on at various levels for over five years. The government will have to get the legal formalities completed before facilitating the launch of a new venture.