MP body in Rs 764 cr loan logjam

The Madhya Pradesh State Industries Development Corporation (MPSIDC) seems to be caught in a loan logjam. The corporation is finding it difficult to recover Rs 764 crore from defaulters.

"We attached properties of some defaulters and put them on auctions. But they have got stays from courts," Raghav Chandra, MPSIDC managing director, told Business Standard.

The corporation had disbursed Rs 382 crore inter-corporate deposit loans in 1998. "But with the interest component, the amount now stands at Rs 764 crore," Chandra said.

The inter-corporate deposit loans, hundi in local parlance, are sanctioned to a company for short term financial needs on the basis of its past record.

The corporation had initiated action under Section 138 of the Revenue Recover Certificate and Negotiable Instrument Act and the State Finance Corporation Act, he said.

"But the existing legal framework seems inadequate for recovering these loans," he said.

Defaulters include promoters of Shree Maheswar Hydel Power project S Kumar's Rs 82.20 crore, Enbee Group Rs 116.78 crore, Bhopal Sugar Industries Rs 3.78 crore, Snowchem India Rs 39.66 crore, Killick Nixon Rs 23.45 crore, Alpine Group Rs 78.47 crore, Steel Tubes of India Ltd Rs 57.77 crore, STI Products of India Rs 21.12 crore, Som Group of Companies Rs 32.69 crore, Siddartha Tubes Ltd Rs 22.19 crore, Ritspins Synthetics Ltd Rs 13.36 crore, GK Exim Rs 39.88 crore, Pasumai Irrigation Ltd Rs 3.35 crore, Mahamaya Steel Industries Ltd Rs 1.88 crore, Sarita Software India Ltd Rs 6.02 crore, Ishar Group Rs 42.84 crore, Gilt Pack Ltd Rs 6.05 crore, Bhanu Iron & Steels Co Ltd Rs 28.93 crore, Jamuna Auto Industries Rs 6.30 crore, Western Tobacco Ltd Rs 5.17 crore and Archana Airways Rs 13.11 crore.