There’s a Minister on the blacklist, he blames Govt

The company, King Chemicals Ltd, also figures on the Reserve Bank’s list of Non Performing Assets (NPAs). Baalu was its chief promoter and, until he joined the Cabinet, was its chairman and managing director.

He remains the company’s largest shareholder. Elder son Raj Kumar is now the company’s chairman while younger son TRB Raja is its managing director. Earlier this year, the company shut down production at its Vadaseri plant in Tanjore, raising questions galore about Baalu’s 13-year-old venture.

But the King Chemicals’ debt has led to a piquant situation where a Union Minister is critical of the Government’s policies. Baalu told The Sunday Express, ‘‘The Government policies on alcohol pricing and control pushed the company further. It is a known fact to every chemical manufacturer that alcohol-based industries had to down shutters because of severe problems which originated from the policies of the Government.’’

Baalu doesn’t just lay the blame on the Centre’s doors. He holds the Jayalalithaa government as responsible for the company’s misfortunes. ‘‘I was victimised by the government during early 90s. The licence to manufacture acetic acid and allied chemicals was cancelled. The company had to go to the SC to get it restored.’’

Curiously, Baalu’s sons say his appointment as a minister is hindering the company’s rehabilitation. ‘‘If anything, his being a minister has harmed the restructuring process,’’ claims Raja. ‘‘The FIs are being flexible but everyone thinks a favourable decision will be seen as proof of the company’s clout.’’

Conceding they were trying to ‘‘strike a deal’’ with their lenders, Raja says cutting down the principal loan amount was one option being considered for its rehabilitation. In Chennai, Executive Director S Baskaran says he is the only senior employee left with King Chemicals. ‘‘The Indian Bank released advertisments seeking buyers for our plant. But no good party came forward. If this is the action our lenders are taking, there is nothing we can do about it. We have to pay up our bank dues.’’

As per Baskaran, when Baalu launched the company in 1989, the project outlay was Rs 18 crore. Of this, the promoters, led by Baalu, invested Rs three crore and a total of Rs 16.18 crore was borrowed from a consortium led by ICICI and Indian Bank. The share of FIs was Rs 9.15 crore.

Two unforseen events took place soon after the Vadaseri plant started production: Centre de-controlled sale of alcohol (raw material for chemicals) and later, when AIADMK government came to power, their licence was cancelled. ‘‘With these, the company collapsed. Alcohol prices went up three times and production dropped to one-fourth. We were unable to pay even interest to our lenders,’’ he recalls. In 1998, King Chemicals was listed with the Bureau of Industrial Finance Reconstruction (BIFR) putting a cap on interest being added to their borrowings from the FIs.

The recovery route adopted by the Indian Bank was aggressive. They froze their bank accounts, added penal interest on their loans which were in the form of term loans, bridge loans and working capital (totalling around Rs 7 crore) and filed a recovery case with DRT in Chennai. The final order in the Rs 24-crore suit is still awaited. As for heavier borrowings from FI’s, King Chemicals, at the first hearing on December 12, BIFR asked for rehabilitation of its loans. Officials say lenders may be trying to locate a co-promoter to bail out the company.

Baalu says ‘‘during the first hearing, the FIs and bank had said there was no siphoning of funds.’’ ‘‘This company was promoted by me as a public limited company and there are 38,000 shareholders. I am one of them and am no longer involved in its day-to-day affairs.’’