Working without letters of credit in attempting exports to countries without functional financial systems and setting up expensive sales forces, Handa’s margins remained on paper. Many payments simply didn’t come through. The write-offs showed up even in the healthy Rs 166-crore profit posted that year: the amount was reduced by Rs 72 crore in ‘‘discounts and sales promotion expenses’’.
The Rs 40 crore went into ‘‘restraining Core International from export business’’. Core International, he adds, is now defunct, and ‘‘the benefits of this transaction have been already received’’. According to the company, the problems started when Core tied up with suppliers for supply of expensive equipment at the same time that banks faced a cash crunch and delayed payments.Consider the Rs 85 crore outflow that bankers say crippled the company. It shows up in the 1999-2000 balance sheet: Rs 45 crore as ‘‘loan to subsidiary company’’ and Rs 40 crore to advance for ‘‘acquisition of business’’. Jhunjhunwala says the Rs 45 crore went to Technology Finance Ltd, a subsidiary that ‘‘controls Core’s purchases’’.