FIs To Slap Takeover Notices On Defaulting Companies

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Mumbai/New Delhi, July 16: : Development financial institutions Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI) and ICICI have rushed to take advantage of the asset reconstruction ordinance and have begun a crackdown on chronic and wilful defaulters.

FIs are busy drawing up lists and plan to send scores of notices for recovery proceedings over the next few days. They have initially identified companies that have diverted loans, siphoned off funds or wilfully defaulted on their commitments. Although each institution is sending its notices separately, the exposure is overlapping in many cases.

The first list, which will probably go off on Wednesday, comprises what were some of the biggest names in Indian business until they ran up huge losses and began to default.

It is reliably learnt that Industrial Development Bank of India (IDBI) has drawn up a list of 22 companies:

Usha group companies Usha Ispat Limited, Usha India Ltd and Koshika Telecom Ltd, DSQ group companies DSQ Software and DSQ Industries (a scrip which is rarely traded), Lloyds Metal Ltd, Modipon Ltd, Mardia Chemicals, Parasarampuria Synthetics, Core Healthcare, Krishna Vinyl Ltd, Royal Cushion Vinyl Ltd, Modern Syntex, Ganesh Benzoplast, Enkay Texofoods Ltd, Ruia Cotex (which recently took over the public sector Jessop Industries), Madhu Milan Synthetics, Rama Pulp and Paper and Kesar Enterprises.

Several of these companies, especially Mardia Chemicals and Parasrampuria Synthetics, are on the ICICI list as well. They are also large defaulters with IFCI and in a few instances such as Mardia Chemicals, Mardia Steel, Core Healthcare there have been vigilance inquiries at IFCI, which established the complicity of its own officials in condoning various loan irregularities.

IDBI chairman and managing director PP Vora recently said at a press conference that the FI would focus on recovery of NPAs in an aggressive manner to boost profitability in a big way. IDBI’s NPA recovery during 2001-02 was Rs 535 crore as against Rs 380 crore in 2000-01.

IDBI has already cracked down hard on the Usha group. It has recalled loans to Usha Ispat and removed brothers Vinay and Anil Rai from the management of another group company Malvika Steel.

Mr Vinay Rai said, “The takeover of Malavika Steel was a very smooth affair. The FIs are welcome to takeover our other units where they think they can run them better.”