NEW DELHI, MARCH 30: In a new twist to the JCT-Polysindo deal, the Indonesian company has accused JCT of going back on its earlier commitment on the price for its synthetic fibre division.JCT Synthetics chief executive G S Mamik said that Polysindo of Indonesia 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 Indian 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 a liability 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. 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 investorsto buy stake in JCT'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 release issued said the company through JCT Synthetics had signed a slump sale agreement to acquire the syntetic fibre division for Rs 413 crore.
Saga of interest-free loans:
MUMBAI: JCT Ltd of the M M Thapar group owes nearly Rs 400 crore to banks and financial institutions. The company has taken these loans paying the commercial interest rates.
Surprisingly, JCT has given crores of rupees to private investment companies of the group without charging any interest. The company is believed to have advanced Rs 247 crore to group companies. The company has given Rs 116.24 crore to Poly Investment and Rs 15.55 crore to Chohal Investment as interest-free loans. The company has apparently extended these loans without the consent of financial institutions. Even after these facts were revealed in the balance sheet for the yearended March 1997, institutions have not taken any action against the company. In fact, auditors of the company had qualified the interest-free advances in the balance sheet.
The balance sheet doesn't reveal how and when the company would recover the interest-free loans extended to group companies. On the other hand, the company has announced with much fanfare its intention to repay loans taken from institutions by selling the synthetic fibre unit.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
