DEC 30: Last week, this writer received a call from Shashi Ruia, chairman of the Essar Group which has been making headlines mainly because of its defaults and overdues to financial institutions. It has also sued us for defamation. Ruia had this stunning revelation to make. He emphatically says that after the recent restructuring of his loans he has no outstandings at all to the financial institutions in any of his companies. We point out that IDBI's note for the latest Senior Executives Meeting (SEM) of the financial institutions continues to list outstandings in several group companies. Ruia insisted that it was not true. We ask him why he does not sue the financial institutions for stating wrong facts and replies that it is exactly what he is planning to do.He also plans to take them to task for the constant leakage of confidential documents (to us), he says. Just for the record, here is what the latest IDBIpapers say. On October 1, IDBI's exposure to the Essar group excluding Essar Steel was - Rs 3042 crore sanctioned, Rs 1884 crore disbursed, total exposure was Rs 2895 crore and overdues were Rs 623 crore including principal and interest. Of these Essar Oil owed Rs 203 crore, Essar Power Rs 109 crore and Rs 23 crore in Essar Shipping. Essar Steel's overdues on that day alone were Rs 286 crore and IDBI's exposure to the company accounts for 51 per cent of its networth of Rs 1147 crore. This does not include the exposure to the pelletisation plant which is hived off as High Grade Pellets limited and is not considered a separate company. Maybe this is just a beginning.Steeling for a glutWhile on steel companies, ICICI's eagerness to finance yet another steel project is the buzz among some corporate houses. Even though the steel industry is in the dumps, ICICI is apparently inclined to fund Bhushan Steel's Rs 400 crore cold rolled steel project with a captive power plant near Ratnagiri in Maharashtra. None of the other institutions are willing to fund the project because they want no more exposure to the steel industry, so ICICI is all set to fund it alone. Curiously, it argues that the Maharashtra based project will give Bhushan Steel geographic reach and coverage and its port based location will give it an export advantage. ICICI argues that Bhushan's clean track record makes it an attractive borrower.Industry sources believe that the biggest attraction is Bhushan Steel's willingness to pay a hefty front end fee of one percent plus negotiable project appraisal charges - these fees would go straight to its bottomline. Steel sector experts, however, argue that it is absurd to look at the track record of an individual company in isolation. All the big steel companies have been in trouble and benefited from the financial institutions' compulsion to evergreen their loans. Financing yet another project, ostensibly because of geographical considerations sounds absurd because it will only add to over capacity in the industry. All that the FI would end up doing is to add to the woes of its existing borrowers and further jeopardise its loans. Are there other merits which are visible only to ICICI?Setting a trendThe millennium has ended with a burst of nostalgia for the Parsi way of life. A beneficiary is Sooni Taraporreviewa whose book on the Parsis' has apparently been snapped up through advance copies way before its release and is a hot New Year give away from the corporate sector. The list of buyers acknowledged by the publishers include - Nadir Godrej of Godrej Soaps, Jamshyd Godrej of Godrej & Boyce, Jamshed & Cyrus Guzder of Airfreight, Asim Ghosh and Sunil Mehta of Orange, The Sir Jamsetjee Jeejeebhoy Benevolent Trust, Firdausi Jussawalla of Air India, Krishna Kumar of Indian Hotels, Sanjiv Malhotra of The Oberoi, The Merwanjee D M Jeejeebhoy Trust, Nasser Munjee of IDFC, Nanoo Pamnani of Citibank, Deepak Parekh of HDFC, Cyrus Poonawalla of The Serum Institute of India and Ratan Tata of the Tata Group. So far, book writing has been sponsored by individual corporate houses if the subject was of specific interest to them. Bulk sales to big corporate houses may well be the beginning of a new trend in marketingnon-fiction and research based writing?Tailpiece: It is getting better and better being on the boards of top companies. ICICI, we are told, has equipped its outside directors with the tools to keep a better watch on its activities. Each of them is to get a fancy note book computer with all the frills. The catch is that ICICI has such a high profile set of independent directors that we wonder which of them would need this equipment.Author's email: suchetadalal@yahoo.com
