Financial Daily from THE HINDU group of publications
Monday, Jun 09, 2003
Financial Daily from THE HINDU group of publications Monday, Jun 09, 2003 |
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Info-Tech
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Hardware Money & Banking - Financial Institutions IDBI rules out credit sops to HFCL G. Rambabu
NEW DELHI, June 8 INDUSTRIAL Development Bank of India (IDBI) has refused to entertain a request for concessions on the line of credit granted to telecom equipment major, Himachal Futuristic Communications Ltd, amounting to Rs 230 crore plus interest, asking it to honour the repayment commitments. As per the terms of the line of credit, the company had to repay the outstanding amount in 12 quarterly instalments commencing March 1, subject to the condition that it maintains two quarterly interest balance on the amount. It was also stipulated that the proceeds of the GDR, issued by HFCL in September 2002, would be utilised for prepayment of the credit facility. However, in a status report submitted to the Finance Ministry, IDBI has noted that the company "has the capacity to pay interest and principal dues to IDBI but has not honoured the repayment commitments" so far. It is instead seeking concessions on the principal amount and overdue interest as well as a reduction in the rate of interest. While IDBI is agreeable to granting a moratorium of one year on the principal amount and reschedulement, it was against granting any further concessions, it has stated. HFCL had sought a moratorium of principal amount of Rs 230 crore for two years and repayment over a period of five years in 20 quarterly instalments. It also sought that the overdue interest amounting to Rs 19 crore be clubbed with principal outstanding, along with a reduction in rate of interest from 14.65 per cent to 12.5 per cent per annum. To top it, IDBI was asked to consider a moratorium of interest for a period of one year. Explaining the reasons for its rigid stand, the FI has stated that the credit disbursed to HFCL was granted for contracts of Bharat Sanchar Nigam Ltd (BSNL) and payment for this contract amounting to about Rs 351 crore should have been deposited with it. However, HFCL utilised these payments elsewhere without prior approval. It has also stated that the company raised Rs 230 crore from GDR and while a part of the proceeds were used for settling overdues of banks and other FIs, no amount was paid to IDBI. Further, the company has made a net profit of Rs 24.10 crore for the year ending March 31, and has yet not paid IDBI. The company, it said, was also not cooperating with the IDBI-appointed concurrent Auditor. When contacted for his comments, Mr Mahendra Nahata , Chairman, HFCL, said that the company was willing to repay the outstanding dues in a time-bound manner as sought by IDBI. "We are mainly engaged in the manufacture of telecommunication equipment and execution of turnkey contracts on behalf of various telecom operators. Since there is a shortage of working capital, we could not repay our earlier dues on time. If IDBI is now insisting that we repay it, we will do so before the end of the month. For further fund requirements, the company will have to tap other banks and FI's", he said.
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