Financial Daily from THE HINDU group of publications
Thursday, Dec 19, 2002
Financial Daily from THE HINDU group of publications Thursday, Dec 19, 2002 |
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Money & Banking
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Non-Performing Assets Banks look to IDBI for recovery against Roofit Our Bureau
MUMBAI, Dec. 18 BANKS are awaiting a decision from IDBI Ltd, the term lending institution which has major exposure to Roofit Industries Ltd, to go ahead with the recovery proceedings. Roofit Industries Ltd, a manufacturer of asbestos cement sheets, and its sister concern Sun Earth Ceramics, have together defaulted in excess of over Rs 500 crore to a number of lenders many of whom are prominent banks and financial institutions like State Bank of India, Bank of India, IDBI, ICICI and LIC. A consortium of bankers met today to take a view on whether the Securitisation Act needs to be invoked in this case, or if there is any other way to resolve the issue. According to a senior banker with a private sector bank, "We have weighed various aspects of the case and are now awaiting a decision from IDBI since they have the biggest exposure to the company as term lenders''. "Once IDBI conveys to us what is the best action to take, we will move accordingly,'' he said. According to sources close to State Bank of India, the country's largest public sector bank has an exposure of around Rs 20-30 crore. SBI Factors, a non-banking finance company of the State Bank group, also has an exposure of around Rs 2 crore. However, bankers said that both Roofit and Sun Earth Ceramics have sought refuge with the BIFR. "This may daunt proceedings a bit, but the Act has made it easier for banks now to bypass the BIFR,'' said a senior banker. Roofit Industries units in Poona and Chennai are still believed to be working well and Sun Earth's Baroda branch is doing well, according to bankers. Sun Earth Ceramics had also acquired two companies abroad, at a total cost of $5 million - one in Romania and another in Spain - about a year and half ago with about $1 million assistance from Exim Bank. The transactions did not work out as well as the company had thought, Exim Bank sources said.
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