State Bank of India has decided to classify its own Rs 250-crore (Rs 2.5-billion) exposure as a non-performing asset.
ICICI, Axis, State Bank of Travancore, State Bank of Mysore, UCO Bank and IDBI are among the others with a combined exposure of Rs 1,200 crore (Rs 12 billion) to the Chennai-based company, promoted by industrialist A C Muthiah and Farouk Irani, the latter a pioneer of the leasing business in India.
Bankers are not hopeful that the account can be upgraded.
They indicate the entire exposure might have to be written off, if recovery proceedings don’t get anywhere.
Following an inspection of the books of accounts as on March 31, the Reserve Bank of India had, in September, barred the company from transacting business, and to not accept public deposits.
The company moved the high court at Chennai, challenging the central bank order.
Later, both Irani, managing director since 1973, and Muthiah, the chairman, resigned from the board.
Last week, one of its directors, N Ramakrishnan, and Sheetal R, company secretary, had also resigned. Rajeeva Prakash was appointed additional director (independent & non-executive) on its board.
That the company is facing difficult times was indicated in the annual report for 2011-12, when the company’s profit after tax dipped to Rs 31.6 crore (Rs 316 million) in FY12 from Rs 70.9 crore (Rs 709 million)
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