The Hindu Business Line : Thirty months on, Duncans' accounts still being finalised

ACCOUNTS of Duncans Industries Ltd, the flagship company of Mr. G.P. Goenka, have not been finalised for over 30 months and it is unlikely to happen in the near future.

The company, a big player in the tea industry with 12 gardens, also owned a fertiliser plant near Kanpur. But the unit has been closed down since March 2002, and the company is fighting a legal case against the Union Government.

The financial status of the Duncans, despite a fixed asset base of Rs 775 crore, has deteriorated over the last few years and currently its affairs are in a mess. As a result, about 65,000 fixed deposit holders are angry and one section of holders has been regularly demonstrating outside the palatial Duncans House located at the busy Dalhousie area.

But the management is helpless. It is engaged in litigation against the Government on the issue of retention price support scheme over its fertiliser plant near Kanpur. Currently, the case is being heard at the Allahabad High Court. Sources said that if the company lost, it would then have to cough up as much as Rs 360 crore.

Power to the unit has been disconnected for over two years. The utility company's move to disconnect power has been cited as the reason behind Duncans' failure to disclose "a true and fair view of the results of operations". Hence, the accounts could not be finalised.

The last audited accounting period (18 months) of the Duncans ended on September 30, 2001, when it recorded a net profit of Rs 11.67 crore on a turnover of Rs 1825.81 crore. Thereafter in March 31, 2003, it closed another set of accounts (again 18 months) sans the fertiliser business. The accounts were neither audited nor adopted. An AGM was held on September 10, 2003, where the corporate activities were discussed, 10 resolutions were read (not voted) and the meeting was adjourned.

"We do not have any other option but to wait for the final outcome of the legal case on the fertiliser factory," a senior company official told Business Line.

The revival of the Duncans hinges on the fertiliser business, which used to contribute 80 per cent of revenue and profit. SBI Capital Markets found the plant viable in the new fertiliser pricing era.

The reference paper on the company's financial restructuring package was recently accepted by State Bank and was forwarded to the corporate debt restructuring cell.

Investment circles indicated that the company had failed to repay a section of FD holders.

"Most of them were lured by the relatively attractive interest rates offered by Duncans during the heydays of the fixed deposit market," sources said. They added that the company's scrip had been floundering on the bourses, including NSE. Approximately 15,000 minority shareholders are eagerly looking for an exit route for their investments in this counter.

According to company officials, the outstanding payments of the FD holders have been reduced from Rs 140 crore - Rs 150 crore to around Rs 85 crore. The Duncans' total debt exposure is over Rs 600 crore and it needs another Rs 100 crore to restart the fertiliser plant.

The promoters have assured fresh capital infusion and banks and FIs are reportedly eager to help the Duncans out of the whole trouble.

More Stories on : Sick Units | Tea | Fertilisers

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