RIL sources said Trevira saw losses amounting to millions of dollars in 2008, especially after the slump in global demand
Reliance Industries Ltd (RIL), the largest polyester fibre and yarn maker in the world, today said its sick German subsidiary Trevira GmbH has filed for insolvency proceedings with a restructuring plan due to its deep financial crisis.
Trevira has filed an application with the Augsburg Court in the State of Bavaria, Germany for insolvency, RIL informed the stock exchanges today.
RIL had elevated Elke Bauerle, chief restructuring officer for Trevira, as its managing director on May 25. She had joined Trevira from Schultze & Braun, a leading law-firm specialised in restructuring, replacing Hemant Sharma, who was heading the company since RIL’s acquisition in September 2004.
The ¤323-million (approximately Rs 2,170 crore) turnover Trevira, a leading producer of high-end specialised polyester yarn and fibre and a well-known brand in Europe, suffered heavy losses last year due to the slowdown in Europe, especially in the automobile sector.
Trevira supplies 27 per cent of its 120,000-tonne-per-annum production of fibres and filament yarn to the automotive sector and 30 per cent to home textile manufacturers. Rising raw material costs and high spends on energy also affected the performance of the company, said sources.
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RIL acquired Trevira GmbH, a former division of the German giant Hoechst AG, in 2004 for about Rs 440 crore. Post acquisition, the polyester fibre and yarn capacity of the Indian petrochemical giant had risen to 2 million tonnes per annum (TPA). As a result, RIL emerged as the largest polyester producer in the world with access to East European markets and, in return, could bring high-end polyester products to Asian markets.
The Bobingen-headquartered Trevira — which has two plants in Germany and one each in Poland, Belgium and Denmark, employing 1,800 people — also makes about 10,000 tonnes of polyester chips each year.
RIL said that the restructuring move follows major efforts by the company to overcome the impact of the industrial slowdown in Europe, particularly in the automotive and textile sectors. European textile makers are currently facing a considerable drop in demand for their products, while the cost of production and employment is increasing, even as competition from Asian and eastern European industries is stronger, RIL added.
“It is now our task to maintain Trevira’s sound and profitable core. It has good products and is fundamentally competitive and to save the company, however, is not possible without considerable cut-backs. But we shall find the best solution and this is what we shall fight for,” Elke Bauerle said in a statement last week.
RIL sources said the German unit saw losses amounting to millions of dollars in 2008, especially after the global demand slump.
Sources said Trevira had initiated restructuring measures last year under Hemant Sharma, like cost-cutting across various divisions, anticipating the recession. Early last year, high salary rates in Western Europe and increasing competition forced the company to move production for the automobile sector from its Denmark facility to Poland.