GAIL Infuses INR 2,100 Crore In JBF Petrochemicals And Expects To Restart The PTA-PET Resin Unit In The Coming Months

GAIL Makes An INR 2,100 Crore Investment In JBF Petrochemicals, An Insolvent Chemical Firm

GAIL, the biggest gas company in India, made an INR 2,100 crore investment in JBF Petrochemicals Ltd, an insolvent private-sector chemical company which is being acquired in bankruptcy proceedings.

In March, the company gained bankruptcy court approval for the takeover of JBF.

According to GAIL, in a stock exchange filing, it invested INR 2,101 crore (equity of INR 625 crore and debt of INR 1,476 crore) for the resolved bankruptcy plan. Hence, JBF is now a fully-owned GAIL subsidiary which will come into effect beginning June 1, 2023.

For the deal, GAIL bid higher than Oil and Natural Gas Corporation (ONGC) and a consortium of Indian Oil Corporation (IOC) in the IDBI Bank run insolvency process for the recovery of INR 5,628 crore of debt to financial and operational creditors.

JBF Petrochemicals was set up in 2008 for the establishment of a purified terephthalic acid plant with a 1.25 million tonne per annum capacity at Mangalore Special Economic Zone. For the plant, IDBI, along with other banks, lent money to the company. This backward integration project was commissioned in 2017; however, its operations were halted following the failure of repayments to the bank during the same year.

This inability to pay off loans led to lenders taking it to corporate insolvency and bankruptcy (IBC).

At first, three groups-a consortium of IOC-ONGC, MPCI Pvt Ltd and GAIL proposed bids for acquiring JBF in August 2022. They were told to make improvements in the monetary proposals and fix faults.

Finally, revised resolution plans only by the IOC-ONGC consortium and GAIL, the NCLT, were received on September 22, 2022.

According to the Procurement Resource article, GAIL India's oil giant has invested INR 2100 crore in JBF Petrochemicals, which announced bankruptcy recently after failing to repay loans that were taken for starting a PTA-PET Resin Unit by the company. GAIL successfully acquired JBF and now hopes to restart production in the coming months.