SHEENLAC PLANS TAKEOVER OF JENSON & NICHOLSON SUBSIDIARY

Tamil Nadu-based Sheenlac Paints could take full control of its joint venture with Jenson & Nicholson India Ltd (JNIL) as the latter faces insolvency resolution at the National Company Law Tribunal (NCLT).

In February last year, Sheenlac entered into a joint venture agreement with JNIL. Rights of the ‘J&N’ brand were transferred to a JV entity, Jenson & Nicholson Paints Pvt Ltd (JNPPL). It was agreed that although Sheenlac would have a 49 per cent minority stake in this company, it would have the entire managerial and operational control. The rest of the stake in JNPPL remained with JNIL. However, in August 2017, Vivid Colors, a financial creditor, petitioned the NCLT against JNIL. This has been admitted for the requisite insolvency resolution process. JNIL’s total debt is ~2.95 billion. However, JNPPL, the subsidiary, has been left out of the NCLT’s ambit— it didn’t take up any of JNIL’s debt burden.

Ten banks were the original lenders to JNIL. However, they had assigned the entire loan portfolio to Vivid Colors, effectively making this company the current sole lender. he committee of creditors, along with the resolution professional appointed by the NCLT, Vinay Talwar, will be meeting on Monday in Delhi to discuss Expressions of Interest.

Sheenlac had originally aimed to acquire the brand, as well as a majority stake in JNPPL, gradually over five years. It is reportedly now hastening to take control of the entity. Sources in the company told Business Standard they’d be hiring an external auditor for the valuation of JNPPL, to be followed by a takeover offer.

“That is how the J&N brand is expected to live on,” said a person aware of these developments. While Sheenlac Paints acquired the managerial rights during formation of this joint venture, it didn’t opt for takeover of any physical assets. It appears Sheenlac is not keen to bid for the assets of JNIL and instead wants to opt for contractual third-party manufacturing of the J&N brand.

Officials in the paint industry say while the J&N brand has diminished a lot over the years, it can stage a comeback. During formation of the joint venture, Sridhar Krishnamoorthy, chief executive of Sheenlac, had said the J&N brand was worth in excess of ~1 billion and he was eyeing at least ~3.5-billion revenue from this venture during 2017-2022.