Elbit Vision okays overhaul, CEO quits

Elbit Vision Systems approved a major restructuring program as it seeks to cut $1m. in expenses after losing a major Indian government contract.

October 26, 2006 07:50
1 minute read.

elbit logo 88. (photo credit: Courtesy)

Elbit Vision Systems, a provider of automatic in-line inspection and quality monitoring systems, approved a major restructuring program Wednesday as it seeks to cut $1 million in expenses after losing a major Indian government contract. As part of the plan, the Yokne'am-based company said chief executive officer Menashe Shohat has resigned and was replaced by chairman David Gal until a new CEO is found. The company also will see the consolidation of all its Israel activities, including those of subsidiary ScanMaster, into one facility. "We believe that the reorganization plan is extremely important in building a strong management team with the skills and experience for leading the company to meet its new challenges," Gal said. "We anticipate that the consolidation of our operations and facilities will reduce our fixed expenses by approximately $1m. annually and will generate additional efficiencies and other important economies of scale." Last week, the Indian Ministry of Railways rejected two ultrasonic testing cars for which ScanMaster had received a $2.48m. retention payment dependent on the completion of a further testing phase. The ministry terminated the contract after the unsuccessful completion of the tests and invoked its right to receive the performance guarantee payments, the company said. The deal will be reflected in EVS's financials for the period ending September 30 as a $2.2m. revenue item and $1.9m. loss, it said. Gal said EVS is making every effort to convince the Indian Ministry to reconsider its decision.

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