CHENNAI, July 31: The entire board of directors of Best & Crompton Engineering Co Ltd will resign before August 6, to enable the Madras high court constitute a management committee to carry out the statutory affairs of the company till the takeover by Polysindo of Indonesia is formalised.

``All directors, including nominees of the financial institutions, will put in their papers and the court-appointed panel will replace the present board,'' highly-placed management sources said.

The new board would be constituted under the aegis of R Venkitaramanan (ex-RBI governor), with directions from the high court. The existing board under the chairmanship of Vijay Mallya would be formally dissolved. The directors would be sending in their resignations, said the whole-time director, KVR Balakrishnan. Best & Crompton officials also expect that the liquidator who had been earlier appointed by the court will be relieved of his duties.

The high court, hearing a batch of winding up petitions against the company, had advised the suitor from Indonesia to make all efforts to induct the promised funds into the venture and obtain regulatory approvals for the Rs 100 crore takeover.

Polysindo would buy out the entire 30 per cent stake currently held in the company by Vijay Mallya of the UB Group, and 21 per cent stake from financial institutions, to have controlling stake in the ailing company.

The appointment of a new board would facilitate operations of the company such as convening the annual general meeting, appointment of auditors and also allow for share transfers, without which Polysindo cannot take over.

The high court appeared satisfied with the positive stance taken by the banks and financial institutions and creditors, even though the three banks among the consortium of 10 are yet to give their consent in writing.

According to company officials, the Polysindo group has been given 45 days time after the constitution of the board to get the necessary approvals from the Reserve Bank and settle the creditors' dues. The winding up petition would be subsequently dismissed. The group has already got the Foreign Investment Promotion Board (FIPB) approval.

While the current management has already started paying the voluntary retirement scheme (VRS) dues for an older batch which retired during Mallya's chairmanship, Polysindo would settle the remaining dues to workers who have opted for the VRS, within 60 days of coming in. It is learnt that 171 people have already opted for the golden handshake. With the high court paving the way for Polysindo, more retirements will be triggered to meet the Polysindo target, said Best & Crompton Engineering Union president S Paramasivam.

The current management and Polysindo had on Wednesday filed affidavits before the court asserting that a consensus had been reached amongst themselves, the creditors and employees that only the proposed takeover would be in the best interests of the company, having accumulated losses of Rs 153 crore.

Polysindo promised to bring in over Rs 100 crore into the company's finances in less than 60 days of assuming effective management control.

The current management had also announced that its factories at Chennai and Bangalore, which are currently under suspension of work for want of funds, would reopen on August 18.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.