VST Industries has entered into an agreement with Global Green Company (100per cent subsidiary of Ballarpur Industries) to sell VST Natural Products aspart of its restructuring excercise. The move is in line with the recentdecision of the company to move out of non-core businesses like financialservices and agro-processing. The exact consideration for the deal, however,is not known. An amount of Rs 20-22 crore is being speculated. With thecompany's total debt outstanding at Rs 170 crore in fiscal 1999, the cashinflow can come handy in reducing the interest outgo. For fiscal 1999, thecompany paid Rs 22.33 crore towards interest. With these savings, thecompany's gross profit margin will improve sharply. Like its corporatepeers, VST had diversified into financial services and agri-productsprocessing business in 1993-94. However, these diversifications proved adrag on the company's balance sheet. To minimise the effect of thesediversifications on its bottomline, the company had written off Rs 38.67crore as the restructuring cost for its financial services and Rs 53 croreloss on investments in its subsidiary, VST Natural Products Ltd, in fiscal1999.

This led to the company reporting a loss of Rs 88.8 crore for 1998-99. Butfor this extraordinary charge, the company would have recorded a growth atnet level.

Core Healthcare With Core Healthcare's management under pressure fromfinancial institutions to induct a financially strong new promoter, thecounter is likely to witness operators' interest. The scrip is currentlychanging hands at Rs 25.95 and is expected to move up in the short term. Thecompany's total liabilities, including those towards banks and financialinstitutions are in excess of Rs 1,000 crore. The company made a loss of Rs112 crore on sales of Rs 265 crore for the financial year ended June 1998,mainly due to huge interest (Rs 88 crore) and depreciation (Rs 48.05 crore)burden. The poor performance is mainly due to low capacity utilisation ofthe company, in view of the significant over-capacity in the IV fluidsbusiness. The present management of the company is, therefore, underpressure from the financial institutions and banks to enable the inductionof a financially strong new promoter.

According to market sources, German multinational Fresenius AG has showninterest in acquiring a substantial stake in Core Healthcare. However,present promoters are not in favour of inducting a new promoter. Arestructuring package is being worked on, which does not envisage any changein management. In an effort to restructure, the company is planning to sellits power plant (20 MW) for a consideration of around Rs 61 crore. Thecompany had obtained Gujarat government's clearance to convert it it anIndependent Power Producer (IPP) with a raised capacity of 65 MW. Thecompany proposes to utilise 70 per cent of the proceeds for repayment ofdebt and the balance 30 per cent would be utilised for completing certainworks related to power plant. Despite FIs and promoters at loggerheads,shareholders will emerge as winners in this fight.