NEW DELHI, March 22: Financial institutions have set fresh terms for granting a no-objection certificate (NoC) to JCT's proposal to sell its synthetics division to its joint venture with Polysindo.The institutions want Polysindo to take the term loan of over Rs 170 crore on the books of the joint venture. The JCT-Polysindo proposal had envisaged the transfer of term loans of about Rs 126 crore to the new venture.
Polysindo's executives are slated to meet officials of the Industrial Finance Corporation of India on Monday to sort out the matter. According to the proposed JCT-Polysindo deal, Polysindo will accept liabilities worth Rs 96 crore from JCT. These are loans taken from banks by JCT's synthetics division. In addition, Polysindo will accept Rs 99 crore towards current liabilities, Rs 19 crore towards lease and Rs 28 crore owed to Zimmers for a PTA project. Topping this will be additional amounts which have been taken from institutions. JCT has already received the no-objection certificate for theproposed sale from the consortium of banks headed by Allahabad Bank. The company's total outstanding with institutions and banks is estimated to be over Rs 600 crore, of which the company expects to repay a substantial part from the proceeds of the deal with Polysindo.
Following the sale of its synthetics division, JCT plans to restructure its remaining debt, which is about Rs 300 crore. Of this, the company plans to pump in Rs 100 crore as working capital in the cotton-textiles division and replace Rs 130 crore of the remaining Rs 200-crore term loans through external borrowings.
IFCI earlier had rejected JCT's proposal to provide guarantees to the company's overseas debt plans. IFCI wanted a concrete proposal from JCT on its loan repayment plans before underwriting the proposed $47-million debt.
JCT's losses in the first half of the current fiscal stood at Rs 68 crore on a turnover of Rs 419.21 crore. Of this, the synthetic-fibre division alone accounted for a loss of Rs 49 crore. The syntheticsdivision accounted for a Rs 35.52-crore cash loss out of the company's total cash loss of Rs 41.09 crore in the first six months of the current financial year. The company planned to turn around after hiving off its synthetics division to the new joint venture with Polysindo, which was slated for October last year. However, with the institutions putting a hold to the no-objection certificate, JCT will be forced to show the synthetics division's profit-and-loss account for 1997-98 on its books.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
