Keltec makes profits, gets good orders
By James Paul | 19 Apr 2002
Kochi: Kerala Hitech Industries Ltd (Keltec), a state public sector undertaking, has started making profits. The company, which was in red for a long time, is now into executing prestigious orders from institutions like the Indian Space Research Organisation (ISRO) and the Defence Research and Development Organisation (DRDO).
Says Keltec managing director Johnson Peter: "The company’s turnaround was possible mainly due to the confidence reposed on it by the state government, ISRO, DRDO and some financial institutions (FIs). Keltec, which is capable to manufacture precision components and sophisticated engines for the aerospace industry, was under a severe debt burden till recently."
With a loan of Rs 27.56 crore drawn from FIs and banks and its accrued interest touching Rs 51 crore, the total liability of the company in 1999 was Rs 78.56 crore. The company was required to achieve Rs 26.91-crore-worth value-addition at that time to break even, while the possibility was only in the range of Rs 12 crore.
Keltec came out of its debts under a onetime settlement of the liabilities made with FIs and banks. The company paid the principal amount of Rs 27.56 crore and FIs, in turn, waived the full interest accrued till 31 December 1999, amounting to Rs 51.04 crore.
The funds required for the onetime settlement were obtained from ISRO and DRDO (Rs 10 crore each) and the state government (Rs 7.56 crore). ISRO and DRDO, the main customers of the company, offered the assistance as interest-free advance, to be adjusted against the future supply of components to them during the next five years.
The state government’s contribution, too, was in the form of interest-free loan. This need to be paid back only after the repayment obligations to ISRO and DRDO are completed.
Peter says one big advantage with the company, employing over 230 persons, is the good work culture it had built up. Employees belonging to all trade unions have given their full support to the management in the matter of productivity and quality of their work.
Peter is confident in Keltec’s ability to repay the loans from ISRO and DRDO on time.
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