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What pushed IFB into BIFR net

Kohinoor Mandal

KOLKATA, Aug. 16

CORPORATE analysts and senior executives of several banks and financial institutions feel that the present plight of IFB Industries is the result of certain acts of omission and commission, which has had the effect of pushing the company into the arms of the Board for Industrial and Financial Reconstruction (BIFR).

In this context, attention has been drawn to the heavy qualification of the annual results by the auditor, Bhadra & Bhadra, for the accounting year ended March 31, 2001. Incidentally, a resolution was passed at the 25th annual general meeting of sharehol ders, held on Tuesday, to replace the auditors with Deloitte Haskins & Sells.

When pressed by reporters to make a comment, Mr Bijon Nag, Chairman of the board of directors, declined to do so. He told Business Line after the AGM: ``I have stopped talking to the press. Please do not ask me anything.''

In the Directors' Report included in the annual report, under the section `Forfeiture of shares', it is stated: ``During the year, due to non-payment of calls, the company has forfeited 30,50,000 partly paid shares of Rs 2.50 each.''

Later, in Schedule 14 2(b), the point is made: ``30,50,000 partly paid equity shares of Rs 2.50 each, issue price Rs 148 each including premium of Rs 138 each against the application money of Rs 37 each (including premium of Rs 34.50) allotted in 1995-96 , have been forfeited during the year.''

In 1995-96, Mr Nag had applied for 30.50 lakh shares of IFB Industries. He was supposed to pay Rs 45.14 crore. However, he paid only an application money of Rs 11.28 crore. The remaining Rs 33.86 crore was not injected into the company. It is felt that h ad this money been channeled into the company, the reference to BIFR could have been avoided. When this point was raised at the AGM, Mr Nag declared that he ``did not have a penny more'' to invest.

The proposed debt restructuring issue also came up at the AGM (the company is today burdened with a debt of more than Rs 560 crore, the annual interest of which comes to more than Rs 60 crore).

According to the annual report, banks and financial institutions agreed to restructure the debt, but the lead banker, State Bank of India, wanted the personal guarantee of ``one of the directors''. The company declined to provide such a guarantee saying that the director concerned had ``joined the board long after the loans were sanctioned and received by the company''.

When questioned at the AGM on this issue, Mr Nag admitted that the director concerned was his son, Mr Bikramjit Nag.

He said that the guarantee sought by the bank and the FIs ``could not be given as he (Mr Bijon Nag) is still on the board as the chairman''. He declined to accept the generally accepted view that Mr Bikramjit Nag, being the son of his father, was a repre sentative of the promoter.

One corporate analyst said: ``If Mr Nag had provided the guarantee, the debt burden would have been restructured and the company would well have been on the revival path.''

A senior SBI executive said that his bank was helpless. He asked: ``What can we do? We cannot go ahead with the package without the guarantee. Let us now wait for the BIFR directive.''