• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

New Delhi , May 11

THE stormy row between the Nanda brothers over the status of Escorts Heart Institute and Research Centre (EHIRC) does not seem to have abated.

It may take a fresh turn on Wednesday at the Escorts Ltd board meeting, with the younger brother, Mr Anil Nanda, set to express his dissent over a recent decision of Escorts Ltd's Borrowing Committee.

At a meeting held on April 5, the Borrowing Committee decided to raise a term loan of Rs 100 crore by pledging 16 lakh equity shares in EHIRC and other securities with LIC.

In a letter written to Escorts Ltd's company secretary dated May 10, Mr Anil Nanda says that the move to pledge shares of EHIRC "is not only against our commitment to preserve the public charitable status of EHIRC but is also wholly improper and illegal." He adds: "These shares have a paid-up value of Rs 1.60 crore only. If these are held out as a security for a loan of Rs 100 crore, it can only be on the basis that either we do not any more want to register EHIRC as a Section 25 company (a non-profit charitable company) or that we are not disclosing to LIC our commitment to do so."

According to him, in case of a company registered under Section 25, the equity shares can neither have a right to receive the current operating surplus as dividend, nor do they have a right to share in the surplus upon distribution of the company's assets.

He further states that he cannot agree to this position at all.

"The present proposal to pledge its shares for raising Rs 100 crore loan for Escorts Ltd is virtually making a sale and destroying the purpose and status of EHIRC as a public charitable institution. I hope the board will give up this proposal and proceed with the registration of EHIRC as a Section 25 company. If, however, the board decides to proceed otherwise, please do make sure that my dissent is noted... "

An Escorts Ltd spokesperson, though not commenting on the letter, said that as the matter was approved by the Borrowing Committee earlier, it is now being brought up for record at the board meeting.

He also said that it would not be correct to say that only the shares of EHIRC are to be pledged to raise the term loan, as a basket of securities from Escorts Ltd and its subsidiaries that are to be pledged.

"It is normal for a company the size of Escorts to raise long-term loans to carry out business activities such as repaying short-term loans," he added.

EHIRC had become the bone of contention in July last year with the Mr Rajan Nanda-administered Escorts Ltd planning to sell part of its equity in it to an overseas strategic investor.

More Stories on : Outlook | Health | Medical Institutions & Hospitals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
HPCL bidding for Kuwait Petroleum outlets in Thailand

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line