NEW DELHI, March 30: Indonesian firm Polysindo has accused JCT of going back on its earlier commitment on the price for its synthetic fibre division.JCT Synthetics chief executive GS Mamik said that Polysindo was keen on completing the transaction, but JCT has suddenly raised objections on the valuation of the business and has sought an additional Rs 100 crore for the divestment.
Polysindo feels that this would make the transaction unviable. However it is "agreeable for another independent third party valuation". The third party valuer is expected to be appointed shortly, Mamik said.
Mamik said the slump sales agreement between the two companies has been extended by one month till April 30.
JCT's joint managing director Samir Thapar however told The Financial Express that additional Rs 100 crore demanded by JCT was justified as the whole purpose of hiving off the synthetics division was to make the residual businesses healthy. As per the original deal, Polysindo was supposed to take aliability of Rs 513 crore which even the institutions pressed for as a necessary condition for issuing the no-objection certificate. Thapar said the fate of the deal will be decided on April 14 when the Polysindo top brass will be discussing the deal afresh with the company management.
Thapar said that both the companies have mutually agreed upon the extension and the deal has been signed between the two companies on Monday.
The deal was to enable JCT to transfer liabilities to the tune of Rs 400 crore with banks, financial institutions and other debtors. With the sale of its synthetics division been put off JCT is expecting to show a loss of Rs 130 crore on its books for the current fiscal.
In the meanwhile JCT would be looking at other options to cover some its liabilities. According to Thapar, the company plans to hive off its steel division and some of its Mumbai-based asset. Further, Thapar said that the company would be considering the options of talking to strategic investors to buy stake inJCT's total business operations.
JCT is also thinking of going for either an ECB or foreign currency loan to replace part of its high cost rupee debt.
A Polysindo press release issued late tonight said the company through JCT Synthetics had signed a slump sale agreement to acquire the synthetic fibre division for Rs 413 crore. The amount was subject to adjustment for non-realisation of current assets and this stood reduced to Rs 395 crore. Mamik saw little justification in taking more liability due to certain issues such as non-realisation of current assets.
Polysindo has been in discussion with financial institutions and banks to facilitate JCT obtain the requisite non-objection certificate. While the institutions are acceptable to issue the required NOC, formal approval is awaiting acceptance of the settlement plan by JCT.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
