The company has given interest-free loans without any repayment stipulations to its subsidi-ary companies "� Bhalchandra Investments, Mundhwa Invest
ment, Jayakumbhi Investment and Jalakamal Investment.
All these are investment companies.
According to the annual report for 1995-96, the total sum due from the subsidiary companies amounts to Rs 129.88 crore
( 31.4 per cent of the net worth). This is an improvement over the last year's level of Rs 85.39 crore, which was as much as 34.3 per cent of the net worth.
Interestingly, the interest receiveable from one of them "� Bhalchandra Investments"� is Rs 3.36 crore. According to the auditor's report, the amount has been received after the close of the year. This poses an interesting question: how can a company, which has an income of Rs 3.58 crore and an interest outgo of Rs 3.36 crore, afford to pay back the amount?
Another arm owes Bharat Forge Rs 12.07 crore in interest alone, and the amount has been paid in 1996-97. This unit has a net worth of Rs 26.72 crore, of which reserves amount to Rs 0.5 lakh as on March 1996. For 1995-96, it had an income of Rs 16.49 crore and interest outgo of Rs 12.13 crore.
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Moreover, Mundhwa Investment, which has posted a loss of Rs 0.32 crore for March 1996, owes Rs 41.04 crore to Bharat Forge.
The outlook for further recovery also seems dismal because the performance of these companies has been far from impressive. Bhalchandra Investment's market value of investments, as on March 1996, was Rs 12.74 crore as against a cost of Rs 22.98 crore.
Similarly, the market value of Forge Investment was Rs 15.03 crore compared with its cost of Rs 22.35 crore. Others also face similar problems.
Investments went up from Rs 107.95 crore to Rs 175.18 crore, registering an increase of 63 per cent. This was much higher than the rise in its gross block and capital work in progress.
The disappointing part is that most of the investments have gone into group companies. While around Rs 39 crore was pumped into other Kalyani-group companies like Kalyani Steels and Kalyani Seamless Tubes, around Rs 29 crore has been invested in its subsidiaries.
Kalyani Steels, which was being quoted at Rs 100 in March 1995, fell to Rs 46 last March, and is now available at Rs 34 per share. Bharat Forge shareholders should be asking why their money is being poured into unremunerative investments.