The Hindu Business Line : JIK Ind completes debt revamp

Under the corporate debt restructuring (CDR) package, JIK Industries is expected to pay the outstanding debt of Rs 57-58 crore over a 10-year period starting from 2008. The interest cost has been lowered to 9 per cent from its earlier average 16 per cent.

At the pre-debt restructuring stage, the company had a total debt of Rs 110 crore. Of this, Rs 30 crore was converted to equity through a deal with its unsecured creditors converting debt to equity under Section 391 of the Companies Act.

About Rs 8 crore would be converted into equity by the lenders and Rs 11 crore has been waived. Another Rs 4 crore would either be converted into equity or preference shares.

"The debt repayment has been aligned to the company's current operations," said Mr Aditya R. Parikh, Vice-President - Finance, JIK Industries Ltd.

The company had gone down under following accidents at its chemical waste recycling plant and at its crystal-making unit. The company, which had diversified interests - crystal making, money changing and chemical waste recycling - was forced to exit the money changing business after its net worth was eroded. Under the Reserve Bank of India stipulations companies whose net worth was eroded were not allowed to continue in the money changing business.

However, in the post-restructured phase, JIK Industries Ltd has narrowed its focus on its crystal ware manufacturing business.

"The margins in this business are very good, therefore we are confident of a good bottomline growth going forward," Mr Parikh said.

At present, JIK Industries's crystal making unit is partially operational. The company's strength within the crystal business is lead-free crystal. Even as the domestic market is picking up, the overseas market is showing robust growth. JIK is poised to gain from this upward movement primarily because of the skill in hand-made crystal and the cost of operations.

The company is currently in the process of capacity expansion. Once the capacity expansion is in place the company would be on an upward curve.