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C.R. Sukumar

Hyderabad , Sept. 22

BLAMING the Andhra Pradesh State Financial Corporation (APSFC) for all its woes and current sickness, the Hyderabad-based Nagarjuna Institute of Software and Technology Ltd (NISTL), formerly Nagarjuna Granites, has decided to initiate legal action against the corporation.

To recover its dues, the corporation had exercised its powers and seized all the fixed assets of the company in 1998 and sold them during last fiscal. These assets involving an investment of Rs 10.4 crore were created by the company in 1993 out of the proceeds of public issue and promoters' equity contribution. On verification, the company found only assets worth Rs 80.05 lakh left as on March 31, 2003.

Informing these developments to the shareholders through a communication, the NISTL Managing Director, Mr O. Krishna Reddy, said, "Without prejudice to the property rights and ownership in the fixed assets auctioned and sold by APSFC, the board of directors of the company decided to move a writ petition against the corporation challenging the auction and sale of the fixed assets and to remove the fixed assets from the books of accounts pending legal case in the matter."

In the absence of details of sale proceeds, the company has decided not to provide any interest on term loans provided by APSFC. "Since the company was made sick by APSFC, the board decided to take a suitable legal action in the matter," Mr Reddy informed the shareholders.

As per the latest balance sheet, the company has accumulated losses to the tune of Rs 12.32 crore as against an equity base of Rs 8.48 crore. While the term loan from APSFC amounted to Rs 29.45 lakh, the interest accrued and due on this amount stood at Rs 42.14 lakh, taking the total debt burden to Rs 71.6 lakh.

According to Mr Reddy, APSFC had been wilfully troubling the company right from 1989. As the corporation delayed the loan sanction process and adopted a piece-meal method of disbursement, the company had to raise additional equity contribution from the promoters to complete the project.

"The corporation had disbursed term loan aggregating Rs 56 lakh over a period of more than three years with an inordinate delay in release of loan funds, which resulted in delayed implementation of the project," he said.

Mr Reddy informed the shareholders that, "the corporation wilfully acted to stop the public issue by way of issue of a public auction notice for sale of fixed assets of the company and put a condition to repay the debt with interest immediately before the open of public issue."

According to Mr Reddy, the company had agreed to repay the outstanding debt of Rs 78 lakh in 1997 and entered into a one-time settlement agreement with APSFC by paying 15 per cent down payment.

Despite this, APSFC had seized the assets of the company and prevented the management from running the unit with effect from 1998-99, causing huge losses and collapse of the business.

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