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

The company received bankruptcy court approval to take over JBF in March.

In a filing to the stock exchange, GAIL (India) Ltd said it had “injected Rs 2,101 crore (equity – Rs 625 crore and debt – Rs 1,476 crore)” in the promised bankruptcy solution.

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

GAIL outbid a consortium of Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) to recover Rs 5,628 crore owed to financial and operational creditors in the insolvency proceedings run by IDBI Bank.

Incorporated in 2008, JBF Petrochemicals has established a 1.25 million tonnes/year purified terephthalic acid plant in the Mangalore Special Economic Zone.

IDBI and other banks have funded JBF to build the PTA plant for $603.81 million, with technical support from BP and using 50,000 tonnes per month of paraxylene feedstock from state-owned chemical producer OMPL.

The plant, a backward integration project of JBF Industries’ polyester plant, started production in 2017 but ceased operations after the company defaulted on a loan that same year.

The default resulted in lenders dragging it into business insolvency and bankruptcy (IBC).

Lenders and operating creditors, including employees, demanded dues of Rs 7,918 crore, but only Rs 5,628 crore dues were admitted, including Rs 712 crore, to operating creditors.

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

They are asked to improve their financial advice and correct deficiencies. On the last day of September 22, 2022, only revised resolution plans were received from the IOC-ONGC consortium and GAIL, the NCLT order said.

GAIL owns a petrochemical plant in Pata, Uttar Pradesh, with an annual capacity of 8.1 lakh tonnes of polymers. It aims to build a propane dehydrogenation plant at Usar in Maharashtra state by next year with a nameplate capacity of 5 lakh tonnes of polypropylene per annum.