As part of the draft rehabilitation package submitted to the board, banks and financial institutions would be acquiring shares of face value Rs 33.75 crore in the Reliance group controlled company.

The three-member bench of BIFR had proposed a Rs 62.41 crore revival scheme which involved one time settlement (OTS) payable to banks and FIs of Rs 20.16 crore (in cash), Rs 33.75 crore OTS to banks and FIs in form of Reliance group company shares, as well as security deposit with Reliance Industries of Rs 4.5 crore.

The revival scheme also involves capital expenditure of Rs 2 crore and similar amount payable to Citibank.

IPL, part of RP Goenka group, had submitted a rehabilitation proposal to BIFR which involved induction of RPPL as co-promoter of the company for infusion offunds.

The company also submitted that it will enter into a job-work agreement with Reliance Industries for its entire capacity utilisation of polyester fibres.

RPPL has also been asked by BIFR to furnish an undertaking to meet overrun in the cost of the scheme and shortfall in the projected cash-flow.

The Reliance group company would also have to pay interest at the current lending rate in case of default, on the defaulted amount in the past.

The BIFR has directed the current promoter, the RPG group to write-off 80 per cent of the existing paid up capital of Rs 46.45 crore, which would then stand at Rs 9.29 crore, as well as conversion of Rs 1.4 crore unsecured loan from the promoter into equity at par.

Out of the Rs 46.45 crore, equity 51.32 per cent (Rs 23.84 crore) is held by the promoter, 17.29 per cent by Picup (financial institution), 30.02 by public and rest by Unit Trust of India (UTI).

After the proposed capital restructuring, which involves equity reduction along with fund infusionthrough equity by Reliance, banks and FIs, the paid up capital will increase to Rs 81.81 crore.

Following the restructuring, co-promoters RPPL shareholding will be 45.68 per cent, banks and FIs will hold 41.26 per cent while existing promoters' holding will come down to 7.45 per cent.

As per the revised projected profitability, ipl networth is expected to be positive in the first year after the sanction of the modified rehabilitation scheme.

However, the accumulated losses will not get wiped out during the revival period.

BIFR in its earlier order in March, 1995 had sanctioned a rehabilitation scheme of Rs 25.19 crore wherein the promoters contribution was Rs 24 crore and Rs 1.19 crore was through internal accruals.

However, the board had to modify this scheme revising the repayment schedule of term-loans and interest as the performance of IPL further deteriorated due to sluggish market conditions.

The company could not make payments according to the revised scheme also and its debt burden becamevery skewed and could not be serviced with meagre generation from the existing uneconomic plant size.

Accordingly, the company submitted a modified rehabilitataion proposal based on one time settlement of dues of banks and FIs and induction of RPPL as co-promoters.