Home / Companies / Dhunseri group clears dues of Egypt petchem unit

Kolkata:The Dhunseri group has cleared the dues of its Egyptian petrochemical enterprise and is looking to revive it with a partner, chairman Chandra Kumar Dhanuka said on Friday.

Dhunseri Petrochem Ltd has a 50:50 joint venture with Singapore-headquartered Indorama Ventures in India to produce polyethylene terephthalate (PET) resins.

It is likely to rope in the same partner for its Egyptian enterprise as well, according to two persons familiar with the group’s plans, who asked not to be named.

In a regulatory filing, Dhunseri Petrochem said on Friday that Egyptian Indian Polyester Co. SAE has paid $87 million, Rs593.86 crore at current exchange rates, to clear its outstanding dues with lenders Commercial International Bank (Egypt) SAE, Ahli United Bank Egypt SAE, Ahli Universal Bank BSC of Bahrain and International Finance Corp.

Dhanuka said his Egyptian enterprise had a total outstanding loan of $197.92 million. The Dhunseri group settled it by paying 43.95% of the amount. Around $30 million came from the group’s internal reserves. The rest was taken as a loan by the group, according to Dhanuka.

The group has thus become eligible to bid for assets being sold in India under the Insolvency and Bankruptcy Code (IBC). It has filed an expression of interest for the assets of Assam Co. India Ltd. It would not have been allowed make a binding bid under IBC if it remained a defaulter. Also, post-settlement of outstanding dues, the Egyptian company has become debt-free.

Dhanuka declined to comment on specifics about the potential partnership with Indorama Corp for revival of the Egyptian venture. He, however, said the group was open to the idea of roping in a partner.

Dhunseri Petrochem, which was earlier seen as distancing itself from the Egyptian company, on 21 May announced that it had bought a 23% stake from an Egyptian state-owned enterprise. It is now looking to buy out 7% more in the company from another local enterprise, following which the company will be fully owned by the Dhunseri group. The plan is to eventually turn this company into an equal stake joint venture with Indorama, according to the unnamed officials cited above.

The Dhunseri group turned its Indian petrochemical business into a joint venture with Indorama Corp in 2016. It has two production units in India, one at Panipat and the other at Haldia, which together produce 700,000 tonnes a year.

The Egyptian enterprise, which has an installed capacity of 600,000 tonnes of polyester a year, was not immediately included in the joint venture. At that time, the venture was wallowing in losses and the Dhunseri group was not sure about ploughing more cash into it.

“I am happy that Egypt is with us again," said Dhanuka, adding that setting up such a plant in Egypt now would have cost $225 million, or Rs1,535 crore at current exchange rates. The group invested in 2012-13 $40 million, or Rs200 crore at the then prevalent exchange rates.

But soon after the project was launched, crude prices started to slide and the entire net worth of the company was wiped out by December 2015. Now with crude prices hardening again, the venture could potentially generate $500 million in annual revenue when running at full capacity, according to Dhanuka.

Operations at the unit will start in August and will be slowly scaled up, he said.

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