GAIL infuses Rs 2,100 crore in insolvent chemical firm JBF Petrochemicals

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GAIL, India’s largest gas company has injected Rs 2,100 crore into insolvent private sector chemicals company JBF Petrochemicals Ltd which it acquired in bankruptcy proceedings.

In March, the company received bankruptcy court approval to take over JBF.

In the stock exchange filing, GAIL (India) Limited stated that it had “injected Rs 2,101 crore (Equity – Rs 625 crore and Debt – Rs 1,476 crore) into a compliant bankruptcy resolution scheme.

“Accordingly, JBF has become a wholly owned subsidiary of GAIL with effect from June 1, 2023,” it added.

GAIL has filed consortium of Indian Oil Companies (IOC) and Oil and Natural Gas Corporation (ONGC) in bankruptcy process run by IDBI Bank to recover Rs 5,628 crore dues to financial and operational creditors.

JBF Petrochemicals was incorporated in 2008 to construct a 1.25 Mtpa purified terephthalic acid plant in Mangalore Special Economic Zone.

IDBI Bank and other banks loaned money to JBF to build a PTA plant for 603.81 million USD with technical support from BP and 50,000 tons per month of paraxylene feedstock from state-controlled chemical company OMPL.

The plant, a backward integration project for JBF Industries’ polyester mills, was commissioned in 2017 but ceased operations after the company defaulted on its loans in the same year.

The default led the lenders to drag him into bankruptcy and corporate bankruptcy (IBC).

The lenders and operating creditors, including employees, claimed Rs. 7,918 crore in receivables but only Rs. 5,628 crore in receivables was accepted, including Rs. 712 crore towards operational creditors.

Initially, three parties – the IOC-ONGC consortium, MPCI Pvt Ltd and GAIL – submitted bids in August 2022 to acquire JBF.

They were asked to improve their financial proposals and remedy the defects. The NCLT order said that on the latest date of September 22, 2022, only modified resolution plans were received from the IOC-ONGC and GAIL consortium.

GAIL has an established petrochemical plant in Bata, Uttar Pradesh, with a polymers production capacity of 8,10,000 tons per annum. It aims to build a propane dehydrogenation plant in Ossar, Maharashtra by next year, which will have a nominal capacity of 5,00,000 tpa PP.

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