MS, Jaiprakash, MM Thapar Clock Huge Unpaid Loans

Mumbai, Aug 25: | Updated: Aug 26 2002, 05:30am hrs
The Delhi-based MS Group headed by Pawan Sachdeva leads the fourth part in the series on major defaulters, with others like Hamco, Thapar Alpine, Jaiprakash and IG Petro finding place in the list of seven who have defaulted more than Rs 300 crore but below Rs 350 crore to banks and financial institutions (FIs) by end-March 2001. The other is Basant Paper Group headed by Raghu Raj.

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MS Group had defaulted on loans to the tune of Rs 333.64 crore, with its flagship company, MS Shoes (East) Ltd alone contributing to Rs 210.55 crore, with other four companies joining it to square up the rest. Mumbai-based Hamco (formerly Hindustan Alloys Manu-facturing Company) steered by BM Patel comes next in the list with Rs 331.43 crore of loans declared non-performing by the banks and FIs, with the group flagship Hamco Mining & Smelting Ltd taking the lions share with Rs 310.87 crore.

Thapar Group, headed by one of the seniormost industrialists in the country, Man

Mohan Thapar, follows Hamco with Rs 325.26 crore of defaults, with two of its companies JCT Ltd and JCT Electronics Ltd defaulting to the banks to the tune of Rs 225.79 crore and Rs 99.47 crore respectively. Alpine Group, led by Jamboo G Bhandari, comes close to MM Thapar Group with Rs 324.34 crore, with Alpine Industries Ltd alone contributing Rs 293.67 crore.

Basant Paper Group of Raghu Raj had Rs 320.48 crore of its loans identified as NPAs, with Machinery Manufacturers Corporation Ltd and Utility Engineers Ltd weighing heavily in its NPA portfolio with Rs 166.17 crore and Rs 127.4 crore respectively. Jaiprakash Group of Jaiprakash Gaur had Rs 310.6 crore of NPAs, with Jaiprakash Industries Ltd alone contributing to the whole of it. IG Petro Group, promoted by HP Dhanuka, had defaulted Rs 303.93 crore to the banks and FIs with IG Petrochemicals Ltd contributing Rs 279.36 crore of it.

The above facts were revealed in the fourth part of the ongoing FE study on non-performing assets and large borrowal accounts based on data provided by the All India Bank Employees Association (AIBEA).

MS Shoes East (MSEL) was promoted by Pavan Sachdeva, Urmil Suri and associates as a public limited company. Other group companies are MS Universal Exports, MS International, Pearls Intercontinental etc. The company was initially engaged in the export of footwear, leather shoes and footwear components to Australia, Holland, Germany, the UK etc. MS Shoes had defaulted on loans from eight banks amounting to Rs 210.55 crore.

MSEL made its initial public offering in 1992 at par and, in November 1993, came out with a rights-cum-public issue, offering FCDs worth Rs 35.5 crore. The company again made a rights-cum-public issue in February 1995 of zero-interest FCDs to the public at a premium of Rs 199 and on a rights basis at a premium of Rs 154, aggregating Rs 7 crore. The issue was to finance its diversification setting up a twin-hotel project and a yarn project.

Misrepresentation of the companys share price in its advertisements led to the Sebi seeking clarifications and the BSE threatening not to grant listing. Coupled with this, the high project cost ultimately led to the devolvement of the issue. Criminal proceedings were initiated against Pavan Sachdeva.

Incorporated in 1982 as Shree Copper Components and renamed as Hindustan Alloys Manufacturing Company, Hamco Mining and Smelting got its present name in 1994. Promoted by BM Patel, it manufactures aluminium alloys, tin metals, ingots, tin lead solders, lead alloy and zinc sacrificial anodes. The company diversified into mining and processing of tin and copper.

Hamco came out with a rights issue in August 1993 to part-finance its diversification into the production of die casting/gravity casting automobile components with a capacity of 9000 tpa. The company defaulted on Rs 310. 87 crore to 14 banks and FIs.

JCT Electronics (JEL), formerly known as Punjab Display Devices (PDDL) and a member of the Thapar group, was promoted by the Punjab State Industrial Development Corporation (PSIDC) in 1976 as a 100% subsidiary to manufacture black and white TV tubes, cathode ray tubes and information display systems. In 1985, Jagatjit Cotton Textile Mills (JCT) joined as co-promoters. JEL became a subsidiary of JCT with effect from April 30, 1986. The company defaulted on Rs 225.79 crore of repayment commitments to 14 banks and FIs, by end-March 2001.

Incorporated in 1946 under the name Jagatjit Cotton Textile Mills, the company was renamed JCT in 1989. It is into textiles, filament yarn, steel and export trade.

In 1998, the company entered into a slump sale agreement with Polysindo Group of Indonesia for sale and hive-off its losing synthetic fibre business. It also commissioned its Wire Rope plant during the year, which has been well-accepted in the market. By hiving off the fibre unit, the company is now focussing on its core business of textiles.

Alpine Industries was originally set up as Alpine Malt and Breweries and was subsequently renamed as Alpine Solvex in August 1980. In 1983, the Bhandaris took over the company and set up a solvent extraction plant at Pithampur. In October 1994, the company changed its name to Alpine Industries. It came out with a rights issue in May 1992 to part-finance the project to increase its soyabean solvent extraction capacity. The company failed to adhere to its loan payback commitments to eight banks.

Jaiprakash Industries came into existence in 1986 with the amalgamation of Jaiprakash Associates (P) Ltd (a construction company) and Jaypee Rewa Cement. Both companies were promoted by Jaiprakash Gaur. The amalgamated company went public in 1986. The company had defaulted on three big accounts amounting to Rs 310.6 crore by March 2001.

In March 2001, the company recieved sanction from the Allahabad High Court for its scheme of arrangement, whereby the cement business of the company will stand transferred and vested in its wholly-owned subsidiary, Jaypee Rewa Cement with effect from April 2001. The other subsidiaries are Jaiprakash Hydro-Power and Jaiprakash Power Ventures.

IG Petrochemicals (IGPL) was incorporated in October 1988. The company was promoted by Mysore Petrochemicals (MPCL) together with its associate companies in technical and financial collaboration with Lurgi, Germany. IGPL came out with a public issue of 1.06 cr equity shares at par aggregating Rs 10.61 cr in September 1991. The proceeds were utilised to part-finance a Rs 61.85-cr 100% EOU for the manufacture of phthalic anhydride with a licensed capacity of 45,000 tpa at Taloja.

Due to the fall in price of Phthalic Anhydride in the international market, the company incurred heavy losses in 2001-02, eroding the networth and the company became a sick unit.