JK brings together all cement units

In what is seen as the culmination of a successful attempt to rescue the JK North group (led by Gaur Hari Singhania), its flagship, JK Synthetics, has been demerged. All the cement units have now come under JK Cement Ltd.

In a communication to the UP Stock Exchange, on which it is listed, the company has said as per the one-time-settlement scheme as approved by the Appellate Authority of Industrial and Financial Reconstruction (AAIFR) order of January 23, 2003, the dues of all the secured lenders have been paid in full out of the funds received from the demerger of the company's erstwhile undertaking.

Thus, the cement undertakings stand transferred to JK Cement Ltd with effect from November 4, 2004, and these will now be operated by JK Cement Ltd.

The firm's cement operations include the grey cement works in Nimbahera and Mangrol, Rajasthan, and the white cement works in Gotan, Rajasthan, with an installed capacity of 35.5 lakh tonnes and 3 lakh tonnes, respectively.

The company further said the shareholders of JK Synthetics would be given one share of JK Cement for every 10 shares of JK Synthetics.

Payments to the secured lenders, i.e. the financial institutions (FIs) and the banks, have not been disclosed. Total loans, including interest payments, amounted to Rs 851 crore.

The annual report of the company for the 2003-04 states according to the one-time settlement by the AAIFR of January 23, 2003, the secured creditors were to be paid the principal and 5 per cent simple interest arrears as accrued from September 30, 2001.

Further, the company is to pay 11 per cent simple interest on the one-time-settlement dues for the period from October 1, 2001, till the date of payment to the secured lenders. Interest amount till March 31, 2004, is Rs 157.53 crore, and the principal Rs 380 crore, totalling nearly Rs 538 crore.

The money was to be raised through external commercial borrowings, as the last annual report noted: "The loan agreement has been entered into and the approval of the RBI has been received." Other formalities are being complied with and it is expected that the funds will be arranged within 2-3 months."

However, the ECB did not come through, for reasons which have not been explained. Instead, a consortium of banks, led by the Allahabad Bank, has agreed to bail out JK Synthetics. This has taken at least a year.

The paid-up capital of JK Sytnethics is Rs 79.36 crore, and thus JK Cements' paid-up capital will be Rs 7.9 crore to start with.