CALCUTTA, July 19: Tea major Rossell Industries Ltd, in a restructuring aimed at sharpening its business focus, is planning to sell Rossell Financial Services Ltd and slash its 52 per cent stake in radio-paging outfit Modi Korea Telecommunications Ltd (MKTL).

Following the restructuring, the fledgling MKTL together with Bokel Investments Ltd - the wholly-owned third subsidiary - will no longer be Rossell outfits. It is understood that Rossell chairman Y K Modi has been under pressure from the Korean collaborators in MKTL to de-link tea from radio-paging.

Deepak Atal, managing director of Rossell Industries Ltd, confirmed to The Financial Express that the company is planning to get MKTL and Bokel out of the Rossell umbrella, and that RFL will be sold.Meanwhile, the company is entering the exploitation of coal-bed methane gas in the Asansol-Dhanbad belt in West Bengal. It has obtained licences to explore and supply industrial gas to heavy industries in the area. Bokel holds the majority of the equity in Great Eastern Energy Corporation, which will undertake the project. Rossell is scouting for a foreign partner to bring in expertise and equity.

Rossell's restructuring has been triggered by the fact that the company had to make massive investments in the fledgling MKTL and other subsidiaries in what turned out to be a very bad year for the tea business, its mainstay.

Atal said he expect MKTL to take at least two more years to break even.Although Rossell lifted sales turnover from Rs 51.68 crore in 1995-96 to Rs 74.81 crore in 1996-97, it slipped into the red last year with a loss of Rs 1.17 crore from a profit of Rs 1.03 crore in 1995-96.

It had advanced Rs 14.06 crore against equity and invested Rs 10.45 crore in various companies, including Rs 18.82 crore in its subsidiaries, on a long-term strategic basis. According to the schedules to the accounts attached to the balancesheet, Rossell had advanced inter-corporate deposits of Rs 1.20 crore. The interest of Rs 42.45 lakh on this is overdue.

Atal said MKTL, which has over 65,000 subscribers, will take two more years to break even. The company was formed in March 1995 with Rossell Industries holding 51.99 per cent. With Korea Telecom and Seoul Mobile Telecom as the foreign partners, MKTL is operating in 14 Indians cities including Calcutta.

MKTL, with a share capital of Rs 10 crore, recorded a loss of Rs 2.46 crore for the year to March 31, 1996, and had miscellaneous expenditure to the extent not written off or adjusted of Rs 2.17 crore. Thus, 45 per cent of the net worth has been wiped out. MKTL had secured a loan of Rs 9 crore from the holding company and in turn advanced Rs 1.75 crore, which is understood to be "recoverable in cash or in kind or for value to be received".

RFL, termed a "bad-buy" by Atal, had taken an advance of Rs 8.41 crore against the share capital of Rs 30,700. It became a subsidiary of Rossell Industries in June 1994 with the parent picking up a 50.82 per cent stake.

The holding company advanced loans of Rs 5.71 crore in 1995-96 and despite the fact that the shares were not issued, the total advance at the end of March 31, 1996, was Rs 8.41 crore.

RFL, in turn, had advanced loans against share application money to the tune of Rs 7.9 crore to another company.Similarly, Bokel Investments, which has a share capital of Rs 3 crore, Rossell Industries advanced Rs 4.69 crore in 1994-95 as share application money. The advances increased to Rs 5.10 crore in 1995-96. In this case, Rossell will not get any interest on the advance. Rossell is yet to receive equity against the loan during the last two years. Bokel had also advanced Rs 4.69 crore as share application money to another company and is yet to issued to be any equity.

Atal may join Assam Frontier

Deepak Atal, the managing director of Rossell Industries, is likely to join Assam Frontier Company of Jit Paul. Though Atal refused to comment, it is learnt that his exit is aimed at facilitating Hindustan Lever's takeover of Rossell via Jokai Tea Holdings of the UK.Prior to joining Rossell, Atal was a director of the G P Goenka's Duncan Industries Ltd. He joined Rossell on April 1, 1996, after Ram Adige left the undivided Rossell Tea Ltd to head the Sri Lankan operations of Tata Tea Ltd.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.