Tea Board Decision On Loans Write-Off Draws Flak

This includes a Rs 5.42 crore loan made to India Tea & Restaurants for promotion of Indian tea in London and Sydney and a Rs 5.73-crore loan made to the ailing Tea Trading Corporation of India. These loans have been considered irrecoverable.

This was decided at the board meeting held in Darjeeling late last month.

Tea corporates contend that this situation should have been investigated and the responsibility for any losses demands a proper investigation.

Their dissatisfaction stems from the fact that the tea cess under Section (1) of the Tea Act is collected from tea producers at the rate of 15 paise and 8 paise for every kilogram of made tea for non-Darjeeling and Darjeeling varieties, respectively.

 

The cess is meant to be spent on foreign promotions, research and development, development grants for raising nurseries and Tea Board expenditure. This fiscal, the tea cess budget was cut for the first time to Rs 13 crore, from Rs 14 crore last year.

Documents available with Business Standard show that the Union commerce ministry was approached by the Tea Board to write off dues from Indian Tea and Restaurants Ltd (ITRL). ITRL was set up to promote tea in London, Sydney and other places. This outfit, which is a joint venture between the Tea Board with a 51 per cent stake) and Hotel Corporation of India with 49 per cent, is headquartered at Centaur Hotel in Mumbai. ITRL had taken forex loans from Bank of Baroda for which the Tea Board had to provide a counter-guarantee.

According to corporate sources, ITRL had nearly closed its operations and had become a financially bankrupt company with negative assets.

For winding up ITRL, a `nil due' position of the company was necessary which was not possible unless the Tea Board's dues were written off.

ITRL had exercised its foreign promotional activities through Mayur Restaurant outlets in London and Sydney. This was opened up at India Tea Centre in the Oxford Street premises. Mayur Restaurant was required to pay 70 per cent proportionate rent and rates to Tea Board, which was mostly unpaid.

Another Rs 5.73-crore loan was made to Tea Trading Corporation of India, the ailing central sector unit, over the past three years.

The first was an interest-free loan of Rs 3.50 crore that the Tea Board gave TTCI in 1993-94.

Thereafter in 1994-95 and 1995-96, the Tea Board gave Tea Trading Corporation of India Rs 2.19 crore and Rs 29 lakh respectively as loans.

So far, the government has been able to reimburse only Rs 54.46 lakh, leaving a net shortfall of Rs 2.19 crore. With no additional funds from the ministry, this amount was adjusted against the Board's non-plan expenditure which, sources said, resulted in postponement of major expenditure of the Tea Board.

Sources said though the interest-free loan advanced to TTCI would be refunded to the Board by selling their gardens, there was little chance of the entire amount being refunded.