ICICI Bank had slapped the notice on the company in December under Section 13 (2) of the Securities & Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance 2002, seeking repayment of money within 60 days from the date of notice. The ordinance, passed by the Parliament a few months ago, empowers the financial institutions and banks to take over the assets of a defaulting company.
The company, which was declared sick by the Board for Financial and Industrial Reconstruction (BIFR) in October 2002, went to the high court after it was advised by lawyers that ICICI Banks notice was illegal.
JK Udaipur has maintained that an interest amount of only Rs 1.88 crore was overdue since March 2002 and no payment of principal falls due before the commencement of the financial year 2003-04.
The companys cement plant, having an installed capacity of one million tonne per annum, was closed in March 2002 due a break down in critical equipment. Though the machinery was repaired, the plant was not restarted due to fall in cement prices which made the companys operational unprofitable. The cement plant had an older technology which raises cost of production, company sources told FE.
JK Udaipurs total loan outstandings to financial institutions, banks and others stands at Rs 121 crore. The networth of the company, which has an equity base of Rs 63.36 crore, was completely eroded due to losses after which it was referred to BIFR. The BIFR is now in the process of appointing an operating agency for revival of the company.
As on March 31, 2002, the companys accumulated losses stood at Rs 208.65 crore. The JK group holds about 80 per cent stake in the company.
The group had acquired the company in 1993 from Bajaj Hindustan. The group managed to increase the capacity utilisation from 45-50 per cent to 85-90 per cent and turned around the company, making a cash profit of Rs 12.54 crore and a net profit of Rs 5.72 crore in 1995-96.