Kiev Has Large Exposure In Crb

The Calcutta-based Kiev Finance, which is facing a run on its deposits, has made huge investments in the CRB group and also in Global Finance Ltd. Global Finance Ltd also got caught in the NBFC scam.

The companys links with the CRB Group are indicated in its balance sheet for 1995-96. Kiev Finance holds 70 lakh shares of CRB Capital Markets valued at Rs 5.82 crore as of March 31, 1996.

It also increased its shareholding in Global Finance Corporation, a company in which CRB has a stake, to 9.484 lakh shares valued at Rs 1.31 crore in 1995-96 from a holding of 48,400 shares valued at Rs 13.2 lakh in 1994-95.

 

Out Kiev Finances total investments of Rs 8.27 crore, Rs 7.13 crore has been invested in CRB and Global Finance. Sources with CRB said, Bhansali had a stake of 40 per cent in Kiev Finance. Kiev officials say that the company was set up ten years ago with Bhansalis help but maintain that while Bhansali does have a stake, the exact percentage is not known, but is not substantial. Also, the balance sheet indicates that Topaz Securities, a 100 per cent subsidiary of Kiev Finance, had investments in several CRB Companies such as T I Pharma Ltd (1.155 lakh shares for Rs 31.2 lakh), CRB Corporation Ltd (2.9 lakh shares for Rs 69.94 lakh), and CRB Capital Markets Ltd (1.185 lakh shares for Rs 38.5 lakh).R. Srinivasan, a director of Kiev finance, is the former chairman of Bank of India. Since the company is facing a slowdown in its operations, it sees limited avenues for deployment of resources.

It will not raise fresh deposits for about two years and will depend largely on the income from its leasing activities, its activities as a member of the National Stock Exchange, and its activities in the inter-corporate deposit segment during this time. As per the norms of the Reserve Bank of India (RBI) for pre-mature withdrawal of deposits, the company will pay 14 per cent interest instead of 15 per cent. Also brokerage of five to seven per cent will be discounted.

The business of Kiev Finance has been on the downswing. Even though the March 97 figure are not published, there has been a fall in net profit in 1995-96 to Rs 1.79 crore from Rs 2.95 crore in the previous year.

This is basically due a huge jump in expenses to Rs 1.49 crore from Rs 23 lakh when income rose only to Rs 5.88 crore from Rs 4.17 crore. The root cause of Kiev Finances problems is that CRB around a 40 per cent stake in the company. Company sources however claim that the CRB stake is much less but did not give the exact figure.

That apart Kiev Finance has also made major investments in the CRB group. This is second company with the CRB connection to face a run on its deposits, the first being Global Finance Ltd. Kiev Finance has made preparations to repay the entire fixed deposit corpus of around Rs 1.25 crore within the next three months and plans to suspend deposit mobilisation activities for about two years. Its balance sheet shows that it has a strong net worth to repay depositors.

It networth is Rs 24.22 crore as of March 1996. As against that the loan funds are Rs 5.26 crore. An official said of the total fixed deposit corpus of Rs 1.25 crore Rs 45 lakh has already been withdrawn pre-maturely in the wake of the CRB scandal.

The company is currently processing applications for deposits worth another Rs 30 lakh which will be repaid over the next few days. The remaining Rs 50 lakh will be repaid within the next three months.