THERE are indications that of late FIs have started reiterating their corporate stakes responsibly. Earlier this year, they ousted Kashinath Tapuriah as chairman of Incab Industries. Since the promoter was not willing to sell his 26 per cent stake, the FIs offloaded their own 52 per cent stake to bring in a new promoter. Non-repayment of loans has prompted several FIs to serve winding up notices to companies. Loans from the FIs worth about Rs 600 crore are due for conversion in 350 companies in the third quarter of 1996-97. The FIs have also decided not to exercise their option to convert the debt into equity in scrips that are quoting below par. Orkay, NEPC and Real Value are some heads likely to roll.
The newfound effectiveness has affected other fronts as well. Both ICICI and IDBI have pruned their collective loans from Rs 140 crore to Rs 100 crore to the trouble-ridden PAL-Peugeot Ltd. Earlier, Mescos steel plant in Orissa suffered the same fate. Its virtually shut now. Not long ago, FIs refused to support the Torrent group in its bid for Ahmedabad Electricity Company (AEC)in which FIs have 34 per cent stakefor the apparent reason that the FIs considered the Torrent group incapable of running AEC as well as execute the other Rs 2,300-crore greenfield power project.
But till not so long ago, the institutions were often found wanting in their responsibility. Mostly on account of political pressure which was generated by an unholy nexus between industry and politics. There is no consistent logic to FI behaviour in cases like Swraj Pauls bids on Escorts and DCM or that in Reliance-Larsen & Toubro takeover attempt or the earlier bid on the Premier group by RPG, or Khaitans acquisition and subsequent dumping of Metal Box, or even Ratan Tatas fight with Russi Mody and his subsequent ouster.
The FIs initially supported Paul and changed their stance when the government changed. In Larsen & Toubro, the FIs opposed the Ambani takeover attempt, while they had no problems about Manu Chhabria taking over Shaw Wallace and Dunlop. In the Ratan Tata-Russi Mody battle, they rooted for the promoter against the manager, and in the BAT-Chugh tussle, they were firmly on the managers side fighting the promoter. And when Chugh finally agreed to resign, they firmly committed themselves to supporting Y.C. Deveshwar as the next chairman against the promoter BATs wishes.