Escorts Auto acquired by employees
03 Jul 2004
New Delhi: The ceo of Escorts Auto Components Limited (EACL) along with seven other employees have acquired Escorts Ltd's 78 per cent stake in the company. The balance 22 per cent of the public limited company is owned by about 2,800 shareholders.
As per the agreement, about 80 per cent of the EACL's workforce will be absorbed by Escorts Ltd. This would help the company save on employee-related costs that were believed to be sizeable. Post-acquisition, there would be 250 employees (including 100 permanent employees) on EACL's rolls.
According to Bharat Caprihan, ceo, EACL, another major problem at EACL was of liquidity. However, that too seems to be on resolve mode with both banks and major clients agreeing to the restructuring at the company. The banks have apparently reduced the interest rate on debt by three per cent, while at the same time extending the pay-back period. EACL's major customers too have agreed to revise payment terms to support the restructuring
. "With these steps the break-even for EACL has come down drastically. We are now working on developing new products in order to give a push to volumes," Mr Caprihan said.
EACL manufactures carburettors, oil pumps and clutches for two-wheeler companies.
