MUMBAI, June 23: Baroda Rayon Corporation is planning to form a 50:50 joint venture with Korean conglomerate Samsung to produce and market polyester yarn. The move follows the poor performance of its polyester yarn division due to depressed market conditions.

"We hope to start negotiations with Samsung shortly for a joint venture with a buy-back arrangement," said a company official. Baroda Rayon is also in the process of preparing a detailed diversification plan as part of its efforts to improve performance in the long-run.

The company is likely to make a major foray into automobile spare-parts sector, the official said. It is planning to raise funds for the proposed plan from external commercial borrowings, he added. The company has decided to double the capacity of the nylon tyre cord division from 4,500 tonnes per annum to 10,000 tonnes due to an increase in demand.

The company will make a beginning this year by installing balancing equipment in its nylon tyre cord plant.

This will take the capacity to 6,000 tonnes per annum. It hopes to attain the 10,000 tonne target next year, the official said. The company's nylon plant is opertaing at full capacity now.

Baroda Rayon which came out with a Rs 24 crore rights issue in April has so far collected only 50 per cent of the total amount. The last and final call will be made in July. The company will give the final shape to all its plans once the rights issue is fully-subscribed.

The funds raised through the issue will be used for the existing and pending projects. Baroda Rayon had earlier planned to go in for backward integration and setting up of a solid waste recovery plant. These had been put on the backburner due to want of funds.

Baroda Rayon's polyester yarn operations are not doing too well due to excess capacity brought about by the commissioning of Reliance's plant at Hazira. The company has cut down its polyester yarn production by 50 per cent this year. The board of directors is meeting on Tuesday to consider the unaudited financial results for the six months ended March 31, 1997.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.