Polychem to sell brands to pay dues

FIRE SALE OF BRANDS

To sell liquor brands to settle debts with SBI, BoB & Dena Bank.

This is perhaps the first instance of a company settling its dues by selling its brands. Mumbai-based petrochemicals company Polychem is planning to sell all its liquor brands to settle its debts to its lenders "" the State Bank of India, Bank of Baroda and Dena Bank.

Confirming the development, a company source told Business Standard, "We are open to selling our brands to arrive at a compromise settlement with our lenders and other creditors. This is part of the one-time settlement scheme worked out by the Board for Industrial and Financial Reconstruction (BIFR)."

The source declined to comment on how much the company expects to raise from the sale.

Polychem, which had liabilities of Rs 57 crore at the end of March 2003, was referred to the BIFR in 1999-2000, when its accumulated losses wiped out its net worth.

The company got board approval to sell the brands in July this year. The liquor labels on the block are Alcazar vodka, Men's Club range (whisky, rum, brandy, gin) and Louis XI brandy.

Triumph Distilleries & Vintners Ltd, a UB group company, which currently markets Polychem's brands, is likely to buy the brands, sources said. Alcazar has a national presence, while the other two brands are regional players. The three brands together have combined sales of over two lakh cases a year.

After the sale of the brands, Polychem will exit the liquor business and stick to the manufacture of specialty chemicals at its facility in Navi Mumbai.

The company posted a net loss of Rs 2.69 crore for the year ended March 2003. Its consistent losses in the last 10 years have resulted in a negative net worth of Rs 29.89 crore.

This is perhaps for the first time that a company is readying to settle its dues by selling its brands although there are several cases in which companies have pledged their brands to lenders.

In May 2003, BIFR sanctioned the scheme of rehabilitation of Polychem, permitting the reduction in the equity capital of the company. The subscribed and paid-up equity capital of the company was then reduced from Rs 16 crore to Rs 40 lakh.

Incorporated in 1955, Polychem's products include polystyrene, styrene monomer, industrial alcohol, VAM, acetic acid and PVA. It also had a fairly wide range of alcoholic beverages including whisky, vodka and brandy.