Prag Bosimi Synthetics begins operation after a decade

Prag Bosimi Synthetics Ltd (PBSL), a joint venture between the Assam government and the H B Vyas Group, has restarted polymer production after a gap of nearly 10 years at an initial investment of Rs 150 crore.

The company, the first public-private partnership (PPP) project in the Northeast, will produce polyester partially oriented yarn (POY) and polyester filament yarn (PFY) with an annual capacity of 36,000 tonnes in Assam.

Through a small effort to remove the bottlenecks, the capacity of the plant can be expanded to 45,000 tonnes.

Incorporated in 1987, PBSL came out with a Rs 27.1-crore public issue in February 1992 to partly finance the manufacturing of 15,000 tonnes per annum of PFY, establishment of downstream facilities of draw texturising and draw twisting of yarn, and to meet the working capital requirements.

The total project cost was estimated at Rs 188 crore. The company introduced different varieties of yarn which still has huge demand among textile manufacturers.

The last phase of the project (installation of six direct spinning lines) which was expected to be completed in August 95 was delayed due to various factors including indifferent law and order conditions, lack of infrastructure and skilled manpower, etc. The accumulating loss pushed the company for closure of the plant in early last decade.

Being the only polyester yarn manufacturing company in the entire Northeast and states like West Bengal, Bihar, Uttar Pradesh and Punjab, the revival of PBSL is significant as its product has a huge market potential catering to all major consuming markets in the region.

"We approached Dena Bank and, with the help of new working capital facilities of Rs 35 crore provided by it, have started operations since February-March 2012 and successfully started phase wise operations and have achieved three months production of around 550 tonnes of POY including 50 tonnes of black POY ( value added yarn ) and 150 tonnes of draw textured yarn (DTY)/roto yarn including black (also value added )," said Hemant B Vyas, managing director of the company.

The company landed into huge financial burden after it had gone into successful production from February 2003. Financial institutions, however, restructured loans.

The company came out with first corporate debt restructuring (CDR) in December 2004. Immediately after that, CDR sanctioning parameters changed due to a sudden spurt in the international market of PTA/MEG on rising petroleum prices.

Following that, the company had to approach CDR for revised proposal with funds to be brought from investors.

PBSL was referred to the CDR cell through IDBI for settlement of dues of the financial institutions, banks and and insurance companies.

There was a cost and time overrun also. This was solely due to interest being charged during construction period and pre-operative expenses, said Vyas.

PBSL has now successfully achieved financial closure of the CDR package and total liability have been settled for Rs 76.70 crore. This amount, however, was to be paid as: (a) upfront cash payment of Rs 19.18 crore and (b) issuance of optionally cumulative convertible debentures (OCCD) of Rs 57.52 crore.

Existing facilities will act as a catalyst for future expansion without any major increase in infrastructure facilities. PBSL has already incorporated a new wholly owned subsidiary, Prag Jyoti Textile Park, for setting up a textile park at an outlay of Rs 50 crore which is set to go on stream in 24 months from now, Vyas added.