JK Synthetics Ltd, SM Dyechem Ltd and Modistone, in addition to Dunlop, were among the 19 companies referred to the Board for Industrial & Financial Reconstruction (BIFR) last month.
In all, 32 companies were referred to the board in February. Out of this, eight were rejected, and five are still under scrutiny.
JK Synthetics, the more than half a century old flagship of the Gaur Hari Singhania-controlled J K (North) group, was once ranked among the top 10 private companies in the country.
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The companys losses have been mounting since 1992-93, and it touched Rs 40 crore in 1995-96 when the results were announced after a considerable delay in Oct, 1996. Its net worth is Rs 105.57 crore of which Rs 74.34 crore is equity capital. The company is also weighed down by a huge debt burden of around Rs 700 crore (interest obligations included).
The companys fundamentals have become weak chiefly as a result of the dispute between the three factions of the Singhania family - one led by Gaur Hari and son Yadupati; another by Govind Hari and his son Abhishek; and the third by Gopal Kishans sons, Ramapati and Nidhipati.
SM Dyechem Ltd, the Rs 273 crore company promoted by the Shetty group with S M Shetty as the managing director, recorded losses of Rs 57 crore in 1996-97. Its net worth is Rs 66.27 crore of which Rs 48.60 crore is equity capital.
Incorporated in June 1982, SM Dyechem planned to go in for products which were not being made in India till that time. The company started production in 1982-83 with vicasyst PJD (textile auxiliary), an emulsifier used in the textile industry. However, SM Dyechem closed its mono ethylene glycol (MEG) plant in Kurkumbh in Maharashtra following a stock pile-up and unfavourable market conditions leading to a financial crunch. The company, in the middle of last year, was holding stocks of about 3,000 tonne of MEG. This was the second shutdown of the plant since it was commissioned in March, 1995.
For Modistone, the tyre company of the BK Modi group, it is the second registration with BIFR. It was earlier discharged from the purview of the board in early 1996 although it had continued to be a potentially sick industrial company. According to the previous package prepared by BIFR, Modistones merger with Modi Rubber, another tyre company of the BK Modi group, was considered an appropriate measures for its rehabilitation.
However, the proposed merger was called off even though the boards of the two companies had ratified it. There were fears that the merger would create an unviable venture, given that Modistone was estimated to be making losses of over Rs 2 crore each month. On June 30, 1997, its accumulated losses stood at Rs 58 crore.
Modistones installed capacity is considered too low to make the unit viable.