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Reliance close to deal for JCT's fibre unit

Dinesh Narayanan

MUMBAI, Dec. 5

THE Reliance group is close to finalising a deal to buy out JCT's fibre unit at Hoshiarpur in Punjab. The financial institutions (FIs) are meeting this week to finalise the modalities of the transfer of liabilities of the Thapar group company to Reliance , officials told Business Line today.

The company is being acquired through an associate firm of the Reliance group, Terene Fibres Ltd, and a new company is being formed to take over the unit. The entire deal is expected to be sewed up shortly.

JCT owes about Rs 491 crore to FIs and banks (almost all FIs and about 20 banks have different levels of exposure to the company), inclusive of interest and principal amounting to about Rs 318 crore.

The Thapars had been in talks with Polysindo of Indonesia to sell the company but the deal fell through at the last minute.

Even though the total cost at which Reliance is wrapping up the deal is not known, analysts say that it would be much below the Rs 500 crore quoted by Polysindo.

According to sources close to the deal, the liabilities of the company will be divided into three equal parts. Reliance would pay one-third of the total upfront to the creditors. Another one-third will be converted into equity capital and the rest would be held as zero-coupon debentures.

The fibre unit has a polyester staple fibre (PSF) capacity of 52,000 tpa, a partially-oriented yarn (POY) capacity of 12,500 tpa, a nylon fibre yarn capacity of 7,700 tpa, and polyester chips capacity of 6,000 tpa.

It may be recalled that the Thapar group had finalised the division of the family businesses some time in the middle of November. The division brought JCT, JCT Electronics and Greaves under the control of Manmohan Thapar.

JCT made a net loss of Rs 39 crore for the nine months ended July 30, 2000, on a turnover of Rs 715 crore. Its accumulated losses as on that date amounted to Rs 92 crore.