NEW DELHI, Dec 23: The Board for Industrial and Financial Reconstruction (BIFR) has sanctioned a Rs 67.33 crore draft rehabilitation scheme to revive Maharashtra-based ailing private sector company, Deve Paints Limited (DPL), formerly known as Garware Paints Ltd.

The proposal envisages re-starting the unit, which is closed since November 1994, retrenchment of the entire labour force under voluntary retirement scheme (VRS) and re-employing selectively on a new scale and settlement of dues with secured creditors in one to three years. The cost of the scheme includes repayment of secured creditors worth Rs 42.45 crore, VRS settlement to the tune of Rs 13.30 crore and working capital expenses of Rs 5.24 crore.

During a recent BIFR hearing, it was agreed that the scheme would be financed by the promoter's contribution worth Rs 21.34 crore and another Rs 41.46 crore would be brought in by the sale of assets.It has been assessed that after carrying out essential repairs, the plant would re-start operations by April 1998. Deve Paints was taken over from Garware Paints Ltd by PR Rajarathinam and Associates of the Agni group in November 1994. The company was passing through a difficult phase at that time with low capacity utilisation, high overheads and erosion of working capital funds leading to a severe liquidity crunch.

DPL was an established unit in the market and had achieved capacity utilisation of 95 per cent in the past and its turnover at 91-92 prices with 78 per cent capacity utilisation was over Rs 55 crore. The company has an annual installed capacity to manufacture 6,000 tonnes of paints and enamels, 2000 kilo litres of varnish, 4267 tonnes of oils and 3500 tonnes of synthetic resins.

According to the board, the scheme essentially depends on sale of assets and settlement of creditors out of its proceeds and depends only to a limited extent on the cash accruals of the first three years. The company is expected to earn cash accruals of Rs 7.56 crore during the initial three years as against the requirement of Rs 4.54 crore for financing the cost of the scheme.

It was declared sick in September 1995 and Industrial Development Bank of India (IDBI) was appointed as operating agency to examine the viability of the company.