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Jisco, JVSL merger hits a block over interest claims

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Our Banking Bureau Mumbai
Last Updated : Feb 06 2013 | 6:37 PM IST
The merger of Jindal Iron & Steel Co (Jisco) with Jindal Vijayanagar Steel Ltd (JVSL) has hit a roadblock with Balli Kloeckner GmBH, a Germany-based steel trader, claiming around $22.8 million interest from Jisco. The German company said in a petition filed in the Bombay High Court on Thursday that the repayment of the debt due from Jisco would suffer if the merger is sanctioned by the court.
 
Bally Kloeckner has been supplier of steel slabs to the US Denro, a company promoted by Saw Pipes (India), a group company of the Jisco promoters, said Jisco in its reply to the petitioner. The hearing on the case was adjourned to April 22.
 
According to Shyam Mehta, counsel for Kloeckner, Jisco owes over $22.8 million interest to Bally Kloeckner which is not even disclosed in Jisco's annual accounts. Without making the disclosures, Jisco has obtained an order for a meeting of the unsecured creditors in which the German firm constitutes the major component. This move by Jisco is illegal, the counsel argued.
 
I M Chagla, senior advocate, was the counsel for Jisco. Earlier, in a reply to the petition, Jisco chief executive officer Raman Madhok said that Balli Klockener has no locus standi in the matter as it is not a creditor of Jisco. The supply orders were negotiated with the US Denro between April and October 2000 for which Jisco issued seven promissory notes.
 
Thus the liability was reflected in the books of the US Denro and not Jisco. However, the petition of the German firm states that the sum payable is evidenced by the invoices, international promissory notes and memorandum of understanding in 2001 wherein Jisco was a party.

 
 

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First Published: Apr 10 2004 | 12:00 AM IST

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