Reliance to acquire stake in RPG''s India Polyfibres
22 Jul 1999
India Polyfibres Ltd, the ailing RPG group company, is being revived with a fresh equity infusion. The Reliance group, through a subsidiary company, Reliance Petro-Products, will pick up a 45 per cent stake in the company. The stake will be acquired through a preferential allotment of fully paid shares of Rs 10 each aggregating Rs 27.37 crore and partly paid shares of one rupee each aggregating Rs 1 crore.
The loss-making India Polyfibres was referred to the Board for Industrial and Financial Restructuring in the early 1990s. The BIFR cleared a rehabilitation scheme in March 1995, but the scheme could not be implemented. The company later sought some modifications in the scheme, which BIFR has now granted.
The modified scheme envisages reduction of the share capital of Rs 46.45 crore by 80 per cent to Rs 9.29 crore and increase in authorised capital from the present Rs 55 crore to Rs 85 crore. Reliance will then bring in some equity. These funds, and the allotment of shares aggregating Rs 34 crore to financial institutions and banks to cover outstanding dues, will take the paid-up capital to Rs 73 crore. The company owes Rs 54 crore to financial institutions and banks.
In 1998-99, the company posted a net loss of Rs 24 crore on sales of Rs 109 crore. Its loss in 1997-98 was Rs 26 crore on sales of Rs 98 crore. Fresh funds will be used to retire debts to financial institutions and banks.
India Polyfibres manufactures polyester staple fibre under licence from Du Pont of the US at its plant in Barabanki in Uttar Pradesh. The plant has an installed capacity of 20,000 tonnes per annum. The company is currently making PSF for Reliance under a job agreement. The company expects to achieve full utilisation of its capacity in the near future.