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Reliance Industries, two Jindal group companies, and a Joint Venture between HPCL-Lakshmi Mittal are among the top names to have expressed interest to acquire the bankrupt petrochemical arm of JBF Industries.
JBF Petrochemicals is a manufacturer of Purified Terephthalic Acid (PTA). PTA is used in the manufacture of textiles, food-grade plastics, and bottles, and as a coating in the paint and steel industries.
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JBF Petrochemicals has set up a 1.25 million tonne per annum PTA plant in Mangalore, Karnataka, at an estimated cost of over $600 million. JBF Industries is a leading player in the polyester industry value chain. The company is one of the top 5 domestic market leaders in Textile grade chips, Bottle grade chips, and Partially Oriented Yam.
Among the others showing interest in acquiring JBF Petrochemicals is a consortium of ONGC, Indian Oil, GAIL & MPCI (the second-largest producer of PTA in India). The list of interested parties could expand to 12 by 30th May, when the list is compiled by the company's resolution professional. Shanti Gears and CFM ARC are parties who are likely to join the fray. PTA is a growing business since it is a crucial raw material to make a variety of products. PTA makes up around 70-80% of the polyester products and is important for man-made fabrics or their components.
The bankrupt manufacturer is reported to have an outstanding debt of around Rs 4,700 crores. This is not the first time the acquisition of JBF Petrochemicals has been in talks since lenders of the bankrupt company have been receiving offers ever since 2017. Last year in February, the lenders of the company had invited bids for $463.38 million in debt and 51% equity in the company but the deal couldn't be carried out since the bids weren't up to the mark.
In September 2021, Reliance and CFM ARC were rumored to be in the process to take over JBF Industries but the same couldn't be confirmed. In November 2021, ONGC and GAIL were said to be in talks to acquire JBF Petrochemicals but nothing came out of it. Ultimately, in February 2022, JBF Petrochemicals was admitted into insolvency proceedings by Ahmedabad NCLT.
JBF Petrochemicals is not a publicly listed company but its parent, JBF Industries, is. Recently, JBF Industries announced its Q4 results wherein it disclosed a net loss of Rs 1,098.27 crores as opposed to a net profit of Rs 27 crores disclosed in the corresponding quarter last year. Its sales also declined 4.11% during the quarter.
Today, the share price of JBF industries closed in at INR 13.3 per share.
Article by Aman Agarwal
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