The board of directors of the company, which met on Thursday, approved the proposal and the revised MoU to be signed with Landmark Housing Projects Chennai, the designated buyer of the land.
In what could be termed as a much-needed stitch in time that may save the erstwhile textile giant of southern India from extinction, the shareholders of Binny in March 2010, had given green signal to the management for reviving the firm by hiving off its business into three separate entities in areas such as textiles, engineering and real estate. The parent company was to split into Binny, SV Global Mill and Binny Mills.
As per the scheme, effective since January 1, 2010, the existing shareholders of Binny were to get seven equity shares of R5 each in SV Global Mill, and one equity share of R10 each in Binny Mills for every seven shares held (of R5 ) in Binny. The scheme was to enable Binny to attract capital into some of the key businesses and to lend greater focus to the operation of each of its diverse businesses.
Binny, formed in 1969 by amalgamation of The Buckingham & Carnatic, The Banglore Woollen, Cotton & Silk Mills, Madura, The Ganges Transport & Trading, Binny & Company and Binnys Engineering Works, has been incurring losses ever since due to obsolete machinery, continuous labour issues, excessive labour force and heavy interest burden.
In spite of various difficulties, the present management took over the management of the company in 1987.
Binny was declared a sick unit by the Board for Industrial and Financial Reconstruction (BIFR) in 1993. It then came out of the purview of the BIFR by the order of the Madras High Court in 2008.
Binny, in its board meeting held on October 30, 2008, had approved a detailed business plan for the development of its engineering, properties, textiles, agencies and warehousing business. The board had also decided that each of the businesses had tremendous growth and profitability potential and, therefore, require focused leadership and management attention.
The nature of risk and competition involved in each of these businesses is distinct from others and consequently each of the business is capable of attracting different set of investors, strategic partners, lenders and other stakeholders. There are also differences in the manner in which each of these businesses are required to be managed, the company said on its website.
In order to enable distinct focus in the specific lines of business, attract capital and investors to invest in some of the key businesses and to lend greater focus to the operation of each of its diverse businesses, Binny had proposed to re-organise and segregate by way of a demerger, its business and undertakings, it said.
As part of the recast plan, Binny had recently sold its entire holding of equity shares in Binny Engineering to Thirumagal Mills for a consideration of R3.45 crore.