BIC gets BIFR showcause notice over tardy revival scheme

British Indian Corporation (BIC) has received a showcause notice from the Board of Industrial and Financial Reconstruction (BIFR) because "the tasks set out in the revival scheme (for BIC) have not been implemented".

British Indian Corporation is an erstwhile Kanpur-based woollen major. The next date for hearing is August 7.

In its present order, the BIFR has drawn attention to its earlier orders, the components of which were the following: a) the ministry of textiles would find a private promoter for the long-term rehabilitation of the company; b) a modified draft rehabilitation scheme would be prepared and presented by the operating agency, the IDBI, to be given to the BIFR in 45 days. The BIFR is of the view this has not been done.

Subsequently, the textile ministry put out an advertisement for the rehabilitation, but there has been no response.

As for the second part of the order, the minutes of the BIFR meeting say that the company/operating agency had not submitted any modified draft rehabilitation scheme. And there "was no commitment by the company in regard to framing and submitting a viable scheme", etc.

However, BIC officials say the scheme has been submitted by the IDBI and there are documents to support this. Business Standard has a copy of the modified scheme.

However, the scheme hinges on the sale of surplus land, but before that is to happen, the land has to be turned into freehold from leasehold. Some differences have cropped up in this regard.

BIC wants the conversion to be done as per the circle rate of 1998, as had earlier been decided; but now various departments of the UP government want it done at the circle rate of 2002.

If it is done at the rate of 1998, BIC will have to pay only Rs 47 crore, but if it is the 2002 rate, it will have to pay Rs 87 crore, which, BIC sources say, will jeopardise the revival plan.

BIC Chairman V K Goyal told Business Standard in a recent meeting held to discuss this, various departments of the UP government gave proposals, but nothing emerged.

This has upset the Centre, which is the promoter of BIC. The Centre has pumped in Rs 86 crore, but has refused to commit itself to paying Rs 126 crore more, as demanded by the company, heightening the uncertainty factor for revival.

The revival scheme, as passed in the earlier BIFR orders, envisaged that the company would incur a capital expenditure, including repair and renovation, of their plant and machinery at its two units--Kanpur and Dhariwal.

Also the dues of the FIIs and the only banker, SBI, will be paid as one-time settlement. The labour rationalisation will be done through the VRS and the governments of UP and Punjab will grant relief as per the scheme. But the two governments did not do anything.

The company proceeded with the sale of land/property for the revival in the hope that it would get the land converted into freehold. But that has not happened.

The outstanding dues of Rs 4.532 crore to FIIs and Rs 31.71 crore to the SBI were paid.