DCA delays irk corporates

In the case of ITC, for example, thecompany had sought permission to infuse Rs 350 crore into ITC Classic which is being merged with ICICI. Since this amount is greater than 30 per cent of ITC Classic’s net worth, Company Affairs permission was sought. ITC made the application in January, but the file continues to do the rounds in the ministry. It is understood, that just last week, some further clarifications were sought from ITC.

The infusion of Rs 350 crore into ITC Classic is part of the deal in which ICICI agreed to absorb ITC Classic.

Similarly, Reliance Industries had asked for permission to invest Rs 175 crore in its company Reliance Ports and Utilities Ltd (RPUL). RPUL, in turn, will be in charge of investing in a port and power project which form part of Reliance’s Jamnagar Refinery project. The application was submitted in February.

Industry officials, however, allege that these clarifications are merely in the nature of delaying tactics, as the companies involved have given all manner of documents to the ministry. Besides,even if clarifications are to be sought, why should it take so long to ask for this, they ask.

Interestingly, company officials point out that while the ministry is taking so long over the matter, they can even go ahead with such investments without permission as the monetary penalties involved are quite small. Under Section 621A, such offences — not complying with the rules — can be `compounded’. The maximum fine under this is five thousand rupees. No company, however, has taken this route so far, as they do not wish to take on the DCA which can penalise them in several other ways.