Sources close to the top management told The Financial Express that the restructuring is likely to be implemented with effect from April 1, 2000.

Jaiprakash Industries would retain the turnkey engineering and contracting business. The 2.8 million tonnes per annum (mtpa) cement division at Rewa in Madhya Pradesh is proposed to be merged into Bela Cement Ltd, a wholly owned subsidiary of JIL. Bela Cement has a 1.7 mtpa cement plant also in Madhya Pradesh. The merger of Rewa Cement with Bela Cement will take its total capacity to 4.50 mtpa per annum, making it the largest cement company in the central and north India. Bela Cement will become an associate company of JIL.The power company, which is also awholly owned subsidiary now, will also become an associate company. The management is in talks with some foreign and domestic investors for bringing them as strategic partner in the power company. JIL is setting up three hydel power projects totalling 1700 MW through its subsidiaries on build-own-operate basis to capitalise on its existing expertise in the hydel power project construction. The first 300 MW project will go on stream in 2001.

Sources said if the proposed scheme goes through, the Rs 157 crore share capital of JIL will be split and a major chunk will be transferred into the new companies. The shareholders will be allotted shares in these new companies in the ratios to be decided at that stage. Sources indicated that JIL's equity base may come down to anywhere between 20 per cent to 30 per cent of the existing Rs 157 crore equity base. JIL's Rs 350 crore receivables for contracts executed in Iraq, which have been stuck there for several years, are likely to be converted into bonds by the Indiangovernment, which had stood guarantee for the money at that time. With large engineering order book position of over Rs 7,000 crore and the trimming of the equity base, the company's bottomline could change dramatically.

The company is also expected to appoint an international management consultancy firm to work out the restructuring, sources said.The restructuring exercise has been initiated to sharpen the focus on the three fast growing businesses of turnkey engineering and contracting, cement and power.