In a bizarre case of loan settlement with a couple of public sector banks, debt-ridden Daman-based packaging firm Radha Madhav Corporation ltd has come under the scanner of market regulator Securities and Exchange Board of India (Sebi) for violating its debt-settlement norms.
The case came to the notice of market regulator when the packaging firm announced the settlement of its debt of State Bank of India (SBI) of over Rs225 crore through a Delhi-based Asset Reconstruction Company (ARC) in 2015 for Rs45 crore.
"As far as Radha Madhav case is concerned, it has come to our notice in which two public sector lenders - SBI and Bank of Baroda (BoB) - are reportedly involved in the loan settlement case. The regulator has already started a probe into this matter and we will take all possible action against those who are found guilty in this regard," a senior Sebi official told The Pioneer, requesting anonymity.
On the other hand, the packaging firm claimed that it had a total of Rs408 crore as debt in which the SBI portion has already been settled with the company and the remaining portion of BoB is still under discussion, leaving the residual debt of Rs10-15 crore only in the book.
"We had a total of Rs408 crore as debt and we are highly optimistic that we will be debt-free soon. The SBI portion has already been settled at Rs45 crore and the remaining portion of BoB is still under discussion in some other deal. With these deals we should have only residual debt of Rs10-15 crore in the book," said Radha Madhav Managing Director & Chief Executive Mitesh Agarwal.
When contacted to the concerned senior officials of both the banks for the break-ups of the firm's debt, they declined to offer any statement on this matter. However, one of the officials said, "The matter is reportedly with the Sebi now and we are not able to comment on this."
However, the company's announcement on the loan settlement was made to both the stock exchanges and the firm wrote back Rs103 crore on account of impairment no longer required as income in March 2015. This entire exercise was done with State-run public sector lender SBI on the premise that the net realisable value of the plants of the firm is Rs45 crore, while BoB was involved in some other loan settlement deal to ease the firm's debt pressure.
As per the company's note circulated to the media recently, where it had claimed that the value of its assets was Rs550 crore. But the Managing Director went on saying on record that SBI was settled at Rs45 crore and the firm is selling its Rudrapur plant at Rs54 crore to Jindal Poly in order to settle its debt for which BoB is reportedly involved in this deal, while Jindal Poly out-rightly denied the authenticity in this matter.