Reliance buys DCL Polyester

Synergy Synthetics Pvt Ltd (SSPL), a business associate of RIL, has agreed to acquire 100 per cent stake from its promoters, M B Raju and associates, in DCL and on acquisition RIL would utilise its PFY capacity of 40,000 tonnes. DCL polyester unit is located at Mauda near Nagpur and with this, RIL’s PFY capacity would would go up from 3.2 lakh tonnes to 3.6 lakh tonnes, it added.

SSPL would also make a open offer shortly to buy another 20 per cent of DCL’s stake from public and other shareholders, through the tender method, it said. RIL has worked out a long-term arrangement for utilising the DCL Polyester’s capacity by supplying the basic raw materials purified terepthalic acid (PTA) and mono ethylene glycode (MEG).

The recent acquisition comes close on the heels of RIL buying out the Singhania’s stake in Raymond Synthetics for Rs 5 per share. Over the recent past, RIL has taken over the PFY plants of India Poly Fibres and JK Corp. The takeovers have pushed up RIL’s share in the domestic PFY market to 38 per cent.

Hit by unprecedented rough patch in the polyester industry, DCL Polyester had been incurring heavy losses leading to defaults in the payment of institutional outstandings. A plan for hiking the capacity by 10000 tpa was dropped due to the bleak scenario.

During the year 1998-99, the institutions led by Industrial Development Bank of India (IDBI) had restructured term loan and interest repayment schedule by subscribing to a non-convertible debenture issue (NCDs) aggregating to Rs 62.30 crore. The NCDs will be redeemed.