JK Corp kicks off restructuring, sells polyester wing to Reliance

New Delhi, Mar 26: J K Corp on Friday announced a major restructuring exercise which involves the sale of its polyester business to Relia...

New Delhi, Mar 26: J K Corp on Friday announced a major restructuring exercise which involves the sale of its polyester business to Reliance Industries for Rs 156 crore and transfer of the 2 million tpa cement production capacity to a new company in which an international cement major which will be brought in as a strategic partner.

Company sources said the sale of Orissa Synthetics, the polyester division, has been ratified by the financial institutions. The rest of the restructuring is also expected to be approved by the FIs within the next few weeks.

The restructuring exercise will enable the company to focus on its core businesses of paper and cement. The sale of Orissa Synthetics Ltd to Reliance will drastically improve the bottomline of the loss-making JK Corp. Orissa Synthetics not only had a debt burden of over Rs 155 crore but was also making heavy losses. With Reliance taking over all the liabilities of the company, JK Corp will get rid of annual interest burden of nearly Rs 25 crore, sourcessaid.

Lakshmi Cement, the company8217;s 2 million tpa capacity division, will be transferred to a new company and quot;consolidatedquot; with the 1 million tpa capacity of JK Udaipur Udyog Ltd, thus making it a 3 million tpa cement business, according to a company press release.

JK Corp chairman Hari Shankar Singhania said after a board meeting that the restructuring will enable the company to emerge a stronger and focussed long-term player in the paper and cement businesses.

quot;We have long been a key player in both the core industries of cement and paper and have been investing consistently in terms of capacity enhancement,quot; he said.

Singhania said that under the proposed restructuring, all the long-term partners of the company, including its employees, dealers and others, will stand to gain as we ourselves gain greater strengths in the market place. quot;The new JK Corp plan intends to harness the strong brands such as JK Paper and Lakshmi Cement that the company presently has. We will continually look at buildingand strengthening these brands which today are popular household names,quot; he said.

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According to JK Corp8217;s deputy managing director, Harsh Pati Singhania, both the paper and cement businesses hold immense growth possibilities in an economy like India and will continue to grow healthily over the next few decades.

quot;These also happen to the industries where enormous investments make entry of new players difficult. We intend to take advantage of our historical and early investments in these crucial sectors,quot; he said.