As per the revised proposal, the moratorium period of the repayment of Rs 112-crore principal outstandings is reduced to three months, from the earlier two years. Likewise, the moratorium on working-capital loans is reduced to three months, from 15 months in the original proposal, institutional sources said.

The proposal also envisages a Rs 65-crore infusion by promoters, of which Rs 40 crore will be raised through loans and the balance in the form of equity.

Payment of the principal outstandings will be made ineight annual installments on an interest-free basis, with Rs 60 crore to be paid in six annual installments and the remaining in two. The irregular portion of the cash credit will be converted into working-capital loans repayable in eight annual installments on an interest-free basis. The loans amounting to Rs 56 crore will be paid in two tranches, with Rs 36 crore in six annual installments and Rs 20 crore in the seventh year.

The proposal also seeks a reduction in the company's equity capital by 90 per cent, the sources said. It is believed that the if the deal comes through, Pennar will be under the direct control of the Aggarwal family rather than Sterlite Industries. A senior Sterlite official confirmed that it is the Aggarwals who have made a pitch for Pennar and not his company. The sources said the proposal is not much of an improvement over the earlier one but is likely to be accepted given the current state of affairs at Pennar. Industry sources are sceptical about the chances of PennarAluminium's revival. They say that this can be done only through a major export push, since the margins in the domestic market are low.

The Aggarwal-promoted Sterlite Industries had turned the sick Madras Aluminium into a profitable company in less than three years. The group's efforts to take over Pennar comes after Hindalco and Indal backed out.

Insight
Good news for shareholders

The Aggarwal family's renewed interest in Pennar Aluminium is good news for the ailing company's shareholders. The Pennar Aluminium scrip, which has been languishing at around Rs 4, is once again seeing greater activity. The last two trading days on the Bombay Stock Exchange saw a dramatic rise in the volume of Pennar Aluminium shares.

While an average of 4,000 shares have normally been traded since the beginning of June, 48,000 shares changed hands on Thursday. The heightened activity is accompanied by a price rise. While the scrip closed at Rs 4.75 on Wednesday, it rose to Rs 5.75, before closing at Rs5.50 on Thursday. On Friday, the scrip gained 10 paise though the volumes were lower at 34,000 shares.

Sarad Saraf