Jvg Purchase Of Orkay Polyester Plant Falls Through

The Rs 225 crore deal for the sale of Orkay Industries polyester division to the JVG group has fallen through following JVGs failure to pay the full amount to Orkay.

The division, which produces filament yarn at Patalganga (Maharashtra) is expected to revert to the control of Orkay Industries from November 1.

Market sources said JVG had paid only about Rs 50 crore to Orkay Industries. The remaining portion could not be paid as the group did not have sufficient funds.

The Orkay plant is closed at present. With the deal with JVG having fallen through, market sources say Orkay promoter Kapal Mehra has no option but to shut down the plant.

 

A senior Orkay director confirmed the development but said there are no plans to shut down the plant. The Mehras will raise money somehow to run the plant, he said.

The sale of Orkays polyester division was first proposed in 1995 and Bombay Dyeing made the first bid. A deal was struck at Rs 225 crore but Bombay Dyeing later backed out after a due diligence, conducted for it by Zimmer AG of Germany, discovered that the plants capacity could not be expanded beyond the current 29,000 tonnes.

In late 1996, JVG agreed to take over for the plant for Rs 225 crore. The group paid only about Rs 50 crore, while running the plant for nearly six months.