JK Corp's outstanding debts, estimated at Rs 1,081 crore, have to be repaid by March 2007. The financial institutions feel that the company should be given more time to improve its position since it has been facing financial problems following downturn in its areas of businesses, institutional sources told The Financial Express.

They are of the view that the company's dismal performance can be largely attributed to the downslide in cement, paper and synthetics fibre industries, which do not reflect on the quality of management.

On the issue of lowering interest rate from 17 per cent to 15.5 per cent and subscribing to the proposed NCDs at zero interest for 18 months,sources added that the institutions are not going to get lower rates on their loans than what they have borrowed at.

The institutions feel that the interest rates on the company's outstandings will go up after the initial period of relief, which may prove to be helpful for a possible turnaround of the company.

As per IDBI projections, JK Corp is not expected to make any profits till 2002. The institutions are, however, optimistic about the company's ability to generate cash from 2002.

Under the proposed restructuring, JK Corp's repayment schedule ending in 1998-99 and 1999-2000 is proposed to be repaid as per the existing plan.

For loan schedules ending beyond 2000, the company will, however, not be required to pay any instalments in 1998-99 and 1999-2000. But if repayment schedule ends in 2000-01, such loans will be repaid in that year itself.

In other cases, repayment schedule is proposed to be fixed in such a way that a part of the instalment (about 40 per cent) will be paid as per the existingschedule, while the balance will be carried forward and paid along with the last instalment as per existing schedule.

The company under the existing schedule is required to pay Rs 20.57 crore in 1998-99, Rs 29.94 crore in 1999-2000, Rs 162.79 crore in 2000-01, Rs 284.79 crore in 2001-02, Rs 67.25 crore in 2002-03, Rs 172.19 crore in 2003-04, Rs 136.10 crore in 2004-05, Rs 116.39 crore in 2005-06 and Rs 91.43 crore in 2006-07.

According to the original schedule, the company would have had to repay Rs 117.85 crore in 1998-99, Rs 174.87 crore in 1999-2000, Rs 215.81 crore in 2000-01, Rs 202.36 crore in 2001-02, Rs 119.29 crore in 2002-03, Rs 134.54 crore 2003-04, Rs 48.06 crore in 2004-05, Rs 42.04 crore in 2005-06 and Rs 26.64 crore in 2006-07.

JK Corp also plans to sell off its synthetics division and divest stake in other businesses under its umbrella.