Ruia: Happy man

Calcutta, March 4: The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) has cleared the rights issue of Jessop. The issue is expected to help the company regain its financial health.

In an order dated February 28, 2008, the appellate authority dismissed all the seven appeals against the four orders of the Board for Industrial and Financial Reconstruction (BIFR) in relation to Jessop.

Chairman Pawan K. Ruia said: “Jessop will immediately complete the formalities for the rights issue, which was earlier stayed by the AAIFR.”

Of the Rs 52.5-crore issue, the company had received only Rs 10.41 crore in the first tranche.

A board meeting has been called tomorrow to seek the remaining Rs 41.64 crore from the shareholders.

“The order will increase our borrowing power. Moreover, this will help bring in fresh funds through a stake sale or a follow-on public offer. We can also list on the BSE or the NSE,” Ruia said.

Wagon maker Jessop, which stands to benefit from this year’s rail budget, plans to expand its business but lacks funds.

While validating the rights issue of Jessop, the AAIFR reiterated that the company was out of the purview of the Sick Industrial Companies Act.

Jessop, an erstwhile PSU, was referred to the BIFR in 1995 after the net worth of the company got eroded.

In 1998, the BIFR had sought a change in the management, which had failed to implement the revival schemes approved by the BIFR.

In 2003, Ruia bought 72 per cent of Jessop. Since then different appellants challenged a set of BIFR orders and referred them to the AAIFR.