IG Petro Implements KPMG Recommendations To Cut Debt

Mumbai, May 20: | Updated: May 21 2003, 05:30am hrs
IG Petrochemicals Ltd (IGPL) is working with its lenders to reduce its huge debt, as suggested by KPMG which was appointed by a consortium of lenders to draw up a business plan and suitable restructuring options.

A company official said that the principal amount, apart from the accumulated interest to banks and financial institutions is over Rs 463 crore. He added that KPMG was appointed to draw up a plan in June 2002, after a restructuring package put forward by financial institutions was not viable. KPMG submitted its report in Decemeber 2002 and since then, the company and its lenders are working towards reducing the debt.

The bankers include ICICI Bank, Bank of India, Bank of Baroda, UTI Bank and United Bank of Indian, among others.

Since the earlier restructuring package approved by the financial institutions did not materialise, the company returned the share application money. The company is also not accepting any public deposits.

The official added that the company became sick in September 2002 as the accumulated losses of the company had exceeded the networth. It has been registered with the Board for Industrial and Financial Reconstruction (BIFR) for a rehabilitation package and the first hearing has already been conducted.

However, the company hopes to make a turnaround in the next one or two years. It has already reduced its manpower to curtail expenditure. The official said that about 150 workers were retrenched in January this year of the total of 450 employees. Similarly, 20 management employees were also shown the door. The company also shut down its plant last year to cut down the operational costs.

The company official reasoned that while there was no problem in selling the product (phthalic anhydride), the margins have fallen.

IGPL is running its Taloja plant at full capacity. In 1995, the company made a margin of $500 to $600 per tonne.

This has now come down to $100 to $120 at present.

The company exports 70 per cent of its production while the remaining 30 per cent was sold in the domestic market.

IGPL is facing financial difficulties since the South-east Asian crisis in 1997, with the crashing of phthalic anhydride prices.