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FIs may need to put JK Synthetics house in order
Debashis Chaudhuri
NEW DELHI, January 4: The Govind Hari Singhania faction wants financial institutions to take a fresh initiative to prepare a revival plan for JK Synthetics, instead of waiting for the promoters to submit a consolidated-rehabilitation proposal.Sources close to the Singhania family said differences between the Gaur Hari, Govind Hari and Ramapati Singhania factions were so deep that floating a consolidated plan with the unanimous approval of all factions was virtually impossible. Since the financial institutions' consortium led by ICICI is in favour of a consolidated approach, the rehabilitation exercise has come to a stand still. "The company is not only losing crores of rupees from business operations every month, but it has lost a huge amount of money owing to thefts and auctions of assets by the Rajasthan government," a senior executive of the company said. Sources said capital machinery and office equipment such as air- conditioners had been found missing from the company's premises in Rajasthan. The
state government has also gone in for auction of company's assets to recover its dues. If the asset base of JK Synthetics keeps eroding at this rate, it will be hardly left with any chance for a turnaround, sources added. Sources further said that it was surprising that the consortium of banks and FIs to which the company owes Rs 850 crore, is yet to take a concrete step towards recovery. The Govind Hari faction in 1996 had suggested the sale of Kota complex but the proposal was scuttled by the company's management, sources said. The management favoured the Ramapati faction's suggestion of raising the capital to Rs 110 crore from the capital market and overseas investors, sources added. However, the move never materialised owing to the poor condition of the market and, above all, that of the company not having declared a dividend for seven years, sources stated. Later suggestions were made to dispose of either the Jhalawar complex or the grey-cement division by the same faction, according to sources. But
the Jhalawar complex was not a practical proposition, since man-made fibres no more remained profitable and FIs showed their reluctance, regarding the cement division as it was then making a profit, sources said. In fact, Lehman Bros had managed to find out a buyer for the cement division at an estimated price of Rs 700 crore, but the management decided to hand over the job to DSP Merrill Lynch, sources said. In the meantime, the Kota and Jhalawar complexes were completely shut down and their sales no more remained feasible proposition, sources further said.The only possible way out was to sell off the grey-cement division, which was not supported by the company's chairman Gaur Hari, according to sources.Suggestions were even made that after the sale of the cement division the remaining assets and liabilities of the company would be equally divided, sources added. But the move never materialised and the company is heading for BIFR where it will never receive the attention it deserves, sources felt.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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