Peerless Will Be Deficit-Free By Jan 2003: Chairman
The Peerless General Finance & Investment Co Ltd (PGFI), the Kolkata-based financial intermediary, has been able to bring down its negative net worth from Rs 1,400 crore in 1996 to Rs 200 crore now.
"By January 2003 Peerless will wipe out the entire deficit of Rs 1,400 crore and have a positive net worth," said Peerless chairman D N Ghose.
"Going by the Reserve Bank of India (RBI) norms we need to become a positive net-worth company by January 2003. As on March 31, 2002, we had a gap of Rs 400 crore. Now it has narrowed down to Rs 200 crore. By next January, we will be able to wipe out this too," said Ghosh, who took over the reins as chairman of Peerless in 1996 when the company had a Rs 1,400 crore hole in its balance sheet.
One of the contributing factors to this turnaround was the successful voluntary retirement scheme which saw 3,500 employees opting it.
"Our employee strength has come down from 4,500 to 3,500, and we are saving Rs 40 crore annually on the wage bill," Ghosh said.
Peerless, Ghosh said, has adopted a three-pronged strategy to come out of the woods. "We are focusing on the increase in deposit mobilisation, recovery of bad loans and jump in investment income. The annual deposit collection, which had fallen to Rs 350 crore, has gone up to Rs 600 crore. We are increasingly focusing on technology to network all our offices and distribution centres," Ghosh said.
The largest residuary non-banking company (RNBC) in the country, Peerless, with Rs 8,000 crore worth of deposit base, accounts for 65 per cent of the sector and around 40 per cent of the total market share of all non-banking finance companies.
It has a four-crore depositor base. The RBI inspection report (conducted under Section 45N of the RBI Act, 1934, between September 19, 1995, and November 18, 1995, with respect to the financial position of the company as on March 31, 1995) revealed major disquieting features relating to regulatory compliance of the company, its financial condition as well as operational management.
It found that there had been considerable erosion in realisable value of assets in view of significant increase in the non-performing segments of the loan portfolio.
After the amendment to the RBI Act in 1997, RBI has full powers to regulate the affairs of these companies including the power to require such companies to change the composition of board of directors.
Ghosh, a former State Bank of India (SBI) chairman, took over as chairman of the company in August 1996. Around that time, S M Dutta, former chairman of Hindustan Lever, also joined the Peerless board.
Subsequently, Dipankar Basu, another former SBI chairman, too, joined Peerless as a director.