In a proposal submitted to the Industrial Development Bank of India, the lead institution, the company has also sought reduction in interest rates on existing outstanding loans which amount to over Rs 1000 crore. The company wants to lower the interest rates so that it interest costs work out to 15.5 per cent, exclusive of tax, from the present 17 per cent.

The company plans to mop up Rs 175-200 crore from the sale of polyester business division. JK Corp has appointed HSBC Capital Markets, which has helped it in identifying areas of divestment as part of its financial restructuring plan, to find out a suitable buyer.

The proposal entails raising another Rs 150-175 crore through induction of joint venture partners in its otherbusiness divisions and fresh equity by way of public or preferential issue.

The companys divestment plans are expected to be implemented over three years starting from 1999-2000. J K Corps plans for inducting equity funds are however, projected in 2001-2002 given the current situation in the capital markets.

Significantly, as per the projections of Industrial Development Bank of India (IDBI), J K Corp is not likely to record any profit till 2000-01. The company is projected to register a Rs 89.28 crore loss in 1998-99 followed by Rs 52.45 crore and Rs 26.04 crore losses in the next two fiscals. However, it is expected to come out of the red in 2001-02 with a Rs 3.45 crore net profit.

J K Corp has also proposed a major restructuring of its loan repayment schedules.

The companys total outstanding with FIs, banks and other lenders as an March 31, 1998, stood at Rs 1081.45 crore, which is to be repaid by March 2007. Of this the companys liability with the FIs is estimated to the tune of Rs 887.46 crore,Rs 168.15 crore with the banks and 25.84 crore with other lenders.

J K Corps total interest dues during 1998-99 and 1999-2000 with the institutions alone is estimated to be Rs 206.83 crore. Of this the company would owe IDBI Rs 104.57 crore, ICICI Rs 30.75 crore, IFCI Rs 17.98 crore, IIBI Rs 0.04 crore, UTI Rs 32.83 crore, LIC Rs 17.85 crore and GIC and subsidiaries Rs 2.81 crore.

The company wants to drastically prune the instalment repayment during 1998-99 and 1999-2000 due to the financial crunch. As against original repayment schedule of Rs 117.85 crore in 1998-99 and Rs 174.87 crore in 1999-2000, the company has proposed that it should be allowed to pay only 20.57 crore and Rs 29.94 crore during the two years.

J K Corp has also sought the financial assistance by way of subscription to non-convertible debentures aggregating Rs 285 crore to meet the part of shortfall in resources in case its proposed divestment in the polyester division is delayed. Of this J K Corp is to issue Rs 257 crore in favourof the institutions on a pro-rata basis and the rest Rs 28 crore in favour of banks and other lenders.

Out of the proposed NCD to be issued in favour of the FIs, J K Corp has asked for an adjustment of Rs 207 crore against the interest outflow in favour of the institutions and an additional Rs 50 crore is to be disbursed in cash.

The proposed NCD would be at zero interest for 18 months and would carry interest at the rate of 19.25 per cent so as to give an effective yield of 15.5 per cent. The debentures are proposed to be redeemable in 20 quarterly instalments commencing from mid-2002.

The FIs are of the view that the financial position of the company is expected to improve and the delay in the companys plans for inducting funds by way of divestment, equity or preference share capital can be met by timely assistance by way of restructuring liabilities coupled with additional funds of Rs 285 crore (by way of NCDs).

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