By Our Correspondent
BHUBANESWAR/JHARSUGUDA: The studied silence made by two leading Public sector Banks, SBI and Canara Bank over a loan sanctioned to controversial Action Ispat and Power Limited amounting near about Rs 1200 crore has raised many eyebrows in eastern States of Odisha, where the Company has a closed plant in State’s Jharsuguda.
Why banks are not going after other assets of the wilful defaulters like Action Ispat and Power Limited? This is a billion dollar question now raised in Odisha’s industrial circle. “Action Group is trying to exploit the State with the help of various middle men while 2 Banks like SBI and Canara banks are sleeping on their personal guarantee of promoters like Naresh Agrawal and Navneet Agrawal,” sources said. Who started company giving their personal guarantee and ran away with the money,”? Asked an Industry watcher in Bhubaneswar.
The Mumbai-headquartered State Bank of India (SBI), the largest bank in the country, in December 2019, had tagged New Delhi based Action Ispat and Power Limited corporate borrowers as ‘wilful defaulters’ , sources said. “Bank had last year suspected borrowers like Action Ispat and Power Limited have not paid up despite having money, have diverted bank funds for purposes other than stated initially, have siphoned off funds, or have disposed of charged assets bought from the bank funds.The bank had already filed suits in the court for recovery of money, but these cases go on for years,” they argued.
The Reserve Bank of India (RBI) and introduction of Insolvency and Bankruptcy Code (IBC) have made an impact as Banks are now increasingly resorting to forensic audits. Wilful defaults are now met with severe repercussions as bank funding window gets shut for the promoter and company forever, sources added. The banks should be proactive in monitoring the end-use of funds right from the time of disbursement. The private equity model is the best where every rupee invested is monitored for the stated result or performance.
It may be noted here that companies like Adhunik Metaliks, Monet Ispat, Bhushan Steel of Neeraj Singhal, MBL Infra and host of other cases are facing same problem but Banks are seems showing undue favour to Action Ispat and Power Limited and not taking tangible action against the Company on loan defaulter issue.
Action Group, which has its headquarters, at Netaji Subhash Place at Pitam Pura in New Delhi is flourishing with other lucrative business and but the Company is not paying to the Bankers and looking for middle men to settle the Bank loan of Rs 1200 crore, which was taken for its Jharsuguda Plant in Odisha, closed since past 4 years due to many irregularities.
Sources in Jharsuguda, Bhubaneswar and New Delhi said, Acton Group’s subsidiaries like Action shoes, Nikhil footwear and few other Delhi based company are making profit but the Group seems looking to loot Banks and Odisha’s natural resources and skilled manpower by defalcating the loan amounting near about Rs 1200 crore.
The Odisha plant in Jharsuguda, which was closed, has had a capital outlay of Rs. 1330 Crores, the company had said during a MoU signed with Naveen Patnaik led BJD Government decades back. Action Ispat and Power (P) Ltd had taken the loan from SBI and Canara Bank but now the company through some middle men, trying hard to settle the loan with interest by paying only a small amount.
“Banks are putting pressure on Action Group , so Company wants to settle the Odisha’s Jharsuguda plant issue that was bearing the loan of more than Rs 1200 crore as the company wants to focus on its New Delhi units,” sources said adding that the Action Group is no mood to re-start its Jharsuguda units putting the lives of some 500 regular and casual workers and officials are at stake.
It is learnt from the sources that promoters of Action Ispat have made a bid to the bankers to settle a debt in excess of Rs 1,200 Crore at Rs 250 Crore vide change of management rules. It is pertinent to note that State Bank of India along with few other bankers have declared the promoters as Wilful Defaulters. “If accepted, such an offer would tantamount to huge loss to public money and end of roads for bankers to recover the funds from other businesses of the defaulting promoters,” sources added.
The Action Group is engaged in Steel, Power and Computer peripherals to Footwear, Urban Infrastructure Development and Medical Sector. “Like the BPSL-JSW steel scam, ED should also keep a close watch on Action Ispat and Power Limited and its loan defaulter ,” sources said. “How can a Bank defaulter settle such a huge amount with Banks, which earlier declared it as a defaulter,” asked an Industry watcher in Jharsuguda.
In September 2013, the office of the Comptroller & Auditor General of India (CAG) had pointed a finger at the Odisha Industries Department for incorrect determination of eligibility of Action Ispat and Power Ltd and 2 others like Vedanta Aluminium Ltd – VAL (Jharsuguda), Bhushan Power & Steel Ltd-BPSL (Sambalpur) for availing electricity duty exemption under Industrial Policy Resolution (IPR) – 2001 . These 3 three companies including Action Ispat and Power Ltd (Jharsuguda) — was recommended for electricity duty (ED) exemption valued at Rs 720.36 crore. Action Ispat & Power Ltd was alone unduly recommended for ED waiver valued at Rs 22.68 crore for its 21 Mw CPP unit.
As per IPR-2001, CPPs are entitled to ED exemption payable for a period of five years from the date of commissioning of the plant provided that no such exemption from the payment of ED is available in respect of power sold or supplied to the users other than the industrial units to which the power plant is captive. Similarly, ED exemption worth Rs 114.48 crore for one CPP units of BPSL of 106 Mw capacity was also inappropriately determined, the audit had pointed out then.
“With ED grilling BPSL-JSW over Bank fraud and other issues, Action Ispat and Power Limited official website has withdrawn names of its Management Team from its website, apparently fearing any action from either Banks , CBI and ED,” sources said in New Delhi.
Without wanting to be identified, a businessman associated with materials supply to the industries of Jharsuguda said that Action Ispat and Power Limited had collected raw materials – such as iron ore and coal – illegally without paying taxes for a long time. “A CBI or ED raids in Jharsuguda and New Delhi will expose all illegal network of Action Ispat and Power Limited,” he added
It may be noted here that the ED had also attached assets worth over Rs 4,000 crore of BPSL for alleged bank loan fraud by the company’s former owners. JSW’s bid worth Rs 19,350 crore for BPSL’s plant was approved by the National Company Law Appellate Tribunal (NLCAT) in February this year and the agency was asked to release the assets of BPSL but ED had challenged the NCLAT order taking the matter to Raids and seizers in New Delhi and Gurugram and also the ED, reported that BPSL had engaged in clandestine clearances of finished goods from its Plants at Jharsuguda-Sambalpur belt in Odisha to its plants at Kolkata in West Bengal and Chandigarh in Punjab. Goods valued at Rs 700 crore had been cleared without payment of applicable taxes and duties and without issuance of any statutory invoice,” the ED said in the statement. BPSL’s plants in Odisha was a killing field as hundreds of workers died in the plant in several mishap.
