Study of financial restructuring and survival strategies for RPG cables Ltd

Abstract

ABSTRACT RPG Cables is in the business of manufacturing of Cables-Power & Control Cables, Jelly Filled Telephone Cables.Optical Fibre Cables & House wiring Cables.It underwent trying times between 2003 and 2006 when its jelly-filled and optical fibre cables business faced overcapacity and intense price competition in the market in very short time.This resulted into BIFR (Board for Industrial and Financial Restructuring) to declare this company as financially sick. Over the last few years, RPG cables had taken key financial restructuring measures to address these issues.The first step towards this was a unique exercise of successful conversion of its depositors to the equity holders.With the help of convertible debentures and the equity capital of promoters to raise funds to make payment to the lenders as well as for the working capital requirements, which will enable the company to grow the business. With financial restructuring the debt burden of the company has come down to about Rs. 200 crore resulting in substantial savings on interest cost to the company.Along with this company also achieved commendable success in involving employees and adopting strategies to facilitate the survival under this tough journey. Having achieved the unthinkable, the company has laid out elaborate plans for future growth and rejuvenation.These include strategic sale of land,Targeting growth in the high technology/high profitability Extremely High Voltage (EHV) segment and collaboration with GAIL to layout optical fibre network.