Kitply set for makeover after PE fund infusion

India Debt Management, a group company of ADM, has infused capital in Kitply Industries, which will be used partly to repay the lenders and partly to revive its operations. The proposal to bring in a private equity (PE) player ADM on its board was recently cleared by the board of Kitply Industries and its lenders. The company had outstanding loans of Rs 500 crore to about 15 lenders.

Bankers said that the company ran into trouble owing to an earlier slowdown in the economy and a family dispute over management control. The restructuring of Kitply was referred two years ago to the corporate debt restructuring (CDR) forum — a platform where lenders get together to revolve stressed loans.
The restructuring package envisages Rs 75-80 crore being used to repay the lenders while the balance Rs 40-45 will be infused into the company. While some of the lenders have already sold their loans to Asset Restructuring Company of India (Arcil), other lenders like ICICI Bank, SBI and IFCI would continue as lenders.

Sources said that lenders will be issued non convertible debentures of Rs 40 crore. Pawan Goenka, the promoter, will infuse about Rs 10 crore. Sources said that the company biggest asset is the 1,500 acres of land in Raipur where its plant its also located.

Bankers said that the shareholding pattern of Kitply Industries will change following the capital infusion.
As on December 2004, the promoters hold 11.76% stake. As per BSE data, Dhanani International hold 15.53% while Gaurav India has 7.10% stake in the company.

“At one point of time, bankers were even considering selling the Kitply brand to recover their dues but could not proceed with it because the brand was not mortgaged with them,” said one of the lenders.