The spat between the International Finance Corporation (IFC) and Indo Rama Synthetics (I) Ltd has been amicably settled with the former agreeing to re-schedule the loans it had extended to the O P Lohia-promoted company.
"IFC has agreed to drop the legal proceedings it had initiated," Indo Rama managing director O P Lohia said.
As per an agreement reached between the two, IFC has agreed to give a two-year extension to its $26.5 million loan to Indo Rama. "The loan will be repaid by December 2005 now, as against December 2003 earlier," Lohia said. The company paid the first instalment of $1.2 million to IFC a few days ago. The remaining amount will be paid in equal half-yearly instalments.
About an year ago, IFC had filed a civil suit in Nagpur against Indo Rama claiming $28.16 million (Rs 132 crore) in loan default and penal interest. The suit was accompanied by an application to appoint a receiver and restrain Indo Rama from disposing its plant and machinery situated at Butibori near Nagpur.
Indo Rama had countered by saying that payments to IFC got held up as the private sector lending arm of the World Bank was not agreeing to a financial restructuring plan, while all other financial institutions had given their assent.
Lohia also announced that Indo Rama has tied up with Zimmer of Germany to supply machinery for the brownfield expansion planned by the company at its existing site at Butiburi. The company is adding fresh PSF capacity of 450 tonne per day at a cost of almost Rs 500 crore. "Zimmer has also agreed to give us suppliers' credit," Lohia said adding, "We expect a cut in the import duty on synthetic fibre machinery. We will take up the project after the budget."
Indo Rama declared its third quarter (Q3) results for 2001-02 today. While the company's Q3 net profit has zoomed 141 per cent from Rs 6.21 crore in 2000-01 to Rs 14.97 crore in 2001-02, its Q3 sales turnover improved by five per cent from Rs 441.15 crore to Rs 462.06 crore in 2001-02.
Lohia also announced that the company is planning to invest Rs 75 crore to produce an additional 18,000 tonne per annum of fully drawn yarn (FDY) in lieu of polyester chips. "Margins are better in FDY than chips," Lohia added.
