Duncans board gives nod for fertiliser JV with Jaypee

KOLKATA: Duncans industries board on Thursday approved the induction of Jaypee Fertilizers and Industries — a subsidiary of Jaiprakash Associates — as a strategic investor to revive and rehabilitate its fertiliser unit at Panki in Kanpur.

Duncans Industries plans to initially hive off its fertiliser unit to a new joint venture (JV). The 50:50 JV will be jointly floated by Jaypee Fertilizers and ISG Traders — the investment arm of the Duncan Goenka group and will have a paid-up equity capital of Rs 400 crore.

Duncan Goenka group chairman G P Goenka told ET: “We, along with some professionals, are in the process of working out the debt-equity combination for the new entity. But nothing has been finalised as yet.”

Incidentally, induction of a strategic investor and demerger of the fertiliser business to a separate entity is subject to the Board for Industrial & Financial Reconstruction (BIFR) approving the draft rehabilitation scheme.
The Duncan Goenka group hopes to submit the revised draft rehabilitation scheme soon. Apart from picking up a 50% stake in the proposed JV, the Jaypee Group will also infuse funds into the new entity, and repay about Rs 560-570 crore of the liabilities, including its fixed deposit holders within three months of obtaining statutory approvals, the revised scheme states. Management control of the new entity will vest with the Jaypee Group.

Elaborating, Mr Goenka said, “Following the demerger of the fertiliser business, Duncans Industries will essentially become a tea company controlling some 17 tea estates spread across north Bengal. As part of the scheme, we intend to reduce the company’s paid-up capital of roughly Rs 60 crore and thus, facilitate future growth”.

Duncans Industries’ became a sick industrial company with accumulated losses exceeding its entire net worth in March 2006. So much so, the Panki fertiliser unit downed shutters and could not commence operations owing to paucity of funds. While the fertiliser business generates nearly 80% of earnings, the balance 20% comes from the tea business.