Lenders seek fresh bids for JBF Petrochem after firm fails to get offers

The firm, a step-down subsidiary of JBF Industries, owes some Rs 5,000 cr to the lenders; search is on to find a buyer for its stalled Karnataka project

Indian lenders are seeking fresh bids for JBF Petrochemicals (JPL) after the company failed to attract any bidders due to the ongoing Corona pandemic. The company, in which global private equity giant, KKR has an exposure of Rs 1,000 crore, was sent to the National Company Law Tribunal (NCLT) for debt resolution after it defaulted on its loans.

A banking source said JBF Petrochemicals, a step down subsidiary of BSE listed JBF Industries, owes around Rs 5,000 crore to the lenders and a search is on to find a buyer for its Karnataka project which has stalled for the last few years.

“In the earlier rounds, Reliance Industries had shown some interest in acquiring the parent company's overseas assets and JPL but later they lost interest due to Corona pandemic,” said a banking source.

The lenders of JPL have invoked the pledge on the shares and are now leading the sale process, the source said. The Chatterjee group and Indo Rama had also conducted due diligence of the entire JBG Industries but later backed out, the official said.

KKR, which had acquired 20 per cent stake in the parent company, was leading the sale process but one of the lenders moved the NCLT for debt resolution of JPL.  The parent company has now been declared a willful defaulter by one of its lenders. The auditors of the company have indicated the existence of material uncertainty that may cast significant doubt about the company's ability to continue as a going concern.

JBF Industries Limited was set up in 1982 as a yarn texturising company and later started a backward integration and  expanded capacities in the polyester value chain. Fuelled by debt, JBF increased its capacity and emerged among the top 10 producers of polyethylene terephthalate (PET) chips and BOPET (Biaxially-Oriented Polyethylene Terephthalate) films globally.  

On a standalone basis, JBF is predominantly polyester chips player (textile grade & bottle grade) having capacity of 608 KT pa and Polyester Yarn capacity of 352 KT pa. Having established itself in the domestic market, JBF then entered into overseas markets in 2008 by setting up a PET chips and BOPET films plant in Ras AL Khaimah, UAE.

In 2014, it commissioned a BOPET films plant with capacity of 90 KT pa plant at Bahrain and bottle grade PET chips plant with a capacity of 390 KT per annum at Geel, Belgium.  But by 2017, it started facing headwinds due to cash flow mismatches mainly due to losses in its overseas operations even as its debt shot up. By 2018, it was defaulting to loans and was sent to NCLT. Since then, the matter is pending in the court. In August 2018, KKR announced that it will buy stake in JPL but the deal fell off.