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India Inc’s leading lights are used to seeing their photographs in newspapers. But it’s probably the first time that a bank in India has published the photograph of a prominent industrialist in a public notice, terming him a defaulter.
In an advertisement in prominent dailies, Uco Bank has issued a notice against Nitin Kasliwal, chairman and managing director of S Kumars nationwide (SKNL), who is the guarantor of Rs 110.07 crore loan taken by Reid & Taylor, the fabric and apparel arm of SKNL. The advertisement carries Kasliwal’s picture as well.
The move, bankers said, was part of the “name and shame” policy to make borrowers pay their dues. State Bank of India took the lead recently by publishing photographs and other details of five wilful loan defaulters who had taken export credit of Rs 3 lakh each and did not pay up. But the issue was much smaller than Reid & Taylor’s.
Kolkata-based Uco Bank has already classified the loan as non performing asset (NPA) as the company has not paid back its liabilities. “Inspite of repeated reminders, request and persuations, the borrower has not liquidated the liabilities of the bank.,” Uco said in the notice, adding that the ad has been issued in public interest. The notice warns the public at large to “exercise caution while dealing with the said director, guarantor and company in any manner”.
A Uco bank official said the company had not been responding to reminders to pay up dues. "Giving notice along with the photo of guarantor is an extreme step after using all normal means to ensure timely servicing of loans.", the official said.
Meanwhile, two non-executive directors on board of SKNL -- J Balakrishnan and Dara D Avari -- resigned from the board.
A top official with IDBI Bank, which also has exposure to Reid and Taylor, said there are delays in repayment but it was a performing account as of now. “The fact that one bank has gone public with disclosure will affect the liquidity of the company further,” he said. Bank of India, another lender to the company, said all banks would go in for a coordinated action on the issue..
Ajai Kumar, chairman and managing director, Corporation Bank, said it (Reid and Taylor) was a non-performing asset and the bank was initiating legal action for recovery of Rs 75 crore exposure.
Mumbai-headquartered Reid & Taylor India and its fabrics factory located at Nanjangud, in Karnataka took loan from the Mumbai corporate branch of Uco Bank against hypothecation of 35 acres of land in Nanjangud in Karnataka and on the personal guarantee of Kasliwal, the bank said in the notice.
A mail sent to Kasliwal did not elicit any response.
Reid & Taylor which once had Bollywood superstar Amitabh Bachchan as its brand ambassador, had plans to go for an initial public issue of Rs 1000 crore in FY 2011 but it did not go ahead due to poor markets.
Its expansion plans also did not go as planned. It planned to open 15 flagship stores and 160 exclusive stores of Reid & Taylor but could not open many of them.
According to recent reports, SKNL plans to raise about Rs 600 crore by selling shares of its Reid & Taylor arm through a qualified institutional placement.
Reid & Taylor’s parent SKNL has rode into rough waters in the recent years. Its stock price has fallen 84% from Rs 43.50 since January 4, 2010 to Rs 6.83 now.
The reasons attributed for this fall included high pledge of promoter stake--about 99.7% of promoter stake is pledged with banks and financial institutions.
In December, IDBI Bank invoked 14.57% of the stake and sold 3.66% in the market.
In September 2012, the registrar of companies in the ministry of corporate affairs started an enquiry against the company for alleged violation of corporate governance and other norms. In the aftermath of the enquiry, SKNL's share prices fell to Rs 19.7 from Rs 26.8 in the previous month.
While its net profit grew at a compounded annual growth rate (CAGR) of 30% between 2009--2012, its debt grew 33%.
(with inputs from Krishna Pophale)
