NEW DELHI, MAY 25: The Board for Industrial and Financial Reconstruction has declared state-owned IDCOL Cements Limited sick on erosion of its networth and appointed M P Modi as special director of the company.The board, in a hearing recently, noted that the Orissa-owned company producing portland cement had an accumulated losses of Rs 136.55 crore against Rs 88.5 crore of networth. The IDBI which was appointed as the operating agency complained that IDCOL has not paid either towards principal or interest despite the reschedulement of loans due time and cost overruns. On the other hand, the company was indulging in stripping off assets and had already realised Rs two crore from sale of sundry assets without any permission from creditors.It may be noted that Gujarat Ambuja Cements Limited had proposed to purchase IDCOL at Rs 5.25 per share of the face value of Rs 10. Since IDCOL was not ready for write-down of the face value of the equity, the purchase plans were dropped.On the reasons for such hugeaccumulation of losses, the company executive director D Sahu told the bench comprising of BIFR chairman P P Chauhan and member N P Bagchee that there were time and cost overruns in the implementation of the project.The project had a Rs 43 crore foreign currency loan from the World Bank and due to the delay and rupee devaluation, the loan amount almost doubled. Further, the institutions were earlier charging 14-15 per cent interest rate which was subsequently revised to 18 per cent.The board noted that there was no full time managing director for the company and lack of professionalism and deficiency in management was the main reason for the failure of IDCOL. Hence it appointed Modi as special director of the company to look after its financial and other interests. Even though the company was on the recovery trend in the last three quarters of 1998-99, IDBI representative B S Bedi, general manager, said nothing has been paid to the institutions.Orissa government submitted that the interest burden ofRs 48 crore was the main burden on the company. The operating loss which was Rs 61 crore during 1997-98 was brought down to Rs 33 crore in 1998-99. It further told the bench that the government is ready for a one time settlement (OTS) of Rs 127 crore institutional dues at lower rates of interest with retrospective effect. But the financial institutions sought the precise time frame in which the OTS will be made and the source of funds.The board directed the company to submit a self-contained revival proposal latest by June 10 and IDBI in turn should report to the BIFR by July 25. Also, the BIFR restricted the company from any further sale of assets without the prior approval of the chargeholders and BIFR.
