ADDITIONAL INFORMATION ON CORE HEALTHCARE LTD
Wednesday, February 22, 2006
NOTICE OF CORE HEALTH CARE IN TIMES OF INDIA 22-2-2006
http://epaperdaily.timesofindia.com/Repository/ml.asp?Ref=VE9JQS8yMDA2LzAyLzIyI0FkMDA5MDg=&Mode=G&Locale=english-skin-custom
Comment: This is the text of the Company application 357 of 2005 which has appeared in ahmedabad edition of Times of India on 22 February 2006 ¶ 4:08 AM 1 comments
http://epaperdaily.timesofindia.com/Repository/ml.asp?Ref=VE9JQS8yMDA2LzAyLzIyI0FkMDA5MDg=&Mode=G&Locale=english-skin-custom
Comment: This is the text of the Company application 357 of 2005 which has appeared in ahmedabad edition of Times of India on 22 February 2006 ¶ 4:08 AM 1 comments
Monday, January 09, 2006
order passed on 9-1-2006
REFERENCE ADVERTISEMENT IN TIMES OF INDIA ON 22-2-2006
http://corehealthcare.blogspot.com/2006/02/notice-of-core-health-care-in-times-of.html
--------------------------------------------------------
MATTER CAME UP FOR HEARING ON 9-1-2006
IN THE HIGH COURT OF GUJARATY AT AHMEDABAD
COMPANY APPLICATION NO 383 OF 2005
Dr. Sonia Hurra, learned counsel appearing for Dena Bank has no objection.
O J Civil Appliction No 1 of 2006 is an application filed by on Mr. pankaj S Modi seeking certain relief against M/s Core Healthcare Limited, being one of the shareholders of M/s Core Healthcare Limited, being one of the shareholders of M/s Core Healthcare Limited. As M/s Core Healthcare Limited is withdrawing its application , O J Civil Application No 1 of 2006 cannot be maintained in these proceedings. O J Civil Application No 1 of 2006 is accordingly disposed of. However, the applicant , Mr. Pankaj S Modi would be free to avail of any action as permissible in law.
R S Garg
¶ 4:46 AM 0 comments
http://corehealthcare.blogspot.com/2006/02/notice-of-core-health-care-in-times-of.html
--------------------------------------------------------
MATTER CAME UP FOR HEARING ON 9-1-2006
IN THE HIGH COURT OF GUJARATY AT AHMEDABAD
COMPANY APPLICATION NO 383 OF 2005
IN
COMPANY APPLICATION NO 357 OF 2005
WITH
CIVIL APPLICATION NO 1 OF 2006
CORE HEALTHCARE LTD- APPLICANT
VERSUS
DENA BANK -RESPONDENT
----------
COMPANY APPLICATION NO 383 OF 2005
MRS. SWATI SOPARKAR FOR APPLICANT
DR SONIA HURRA FOR OPPONENTS
CIVIL APPLICATION NO 1 OF 2006
PARTY IN PERSON
MRS. SWATI SOPARKAR
DR. SONIA HURRA
---------
CORAM HONORABLE MR. JUSTICE R S GARG
DATED 9-1-2006
COMMON ORAL ORDER
Mrs. Swati Soparkar, learned cousnel for the applicant informs the court that as Dena Bank is no more a creditor of the company under liquidation , she be allowed to withdraw the application submitted for and on behalf of M/s Core Healthcare Limited.
CORE HEALTHCARE LTD- APPLICANT
VERSUS
DENA BANK -RESPONDENT
----------
COMPANY APPLICATION NO 383 OF 2005
MRS. SWATI SOPARKAR FOR APPLICANT
DR SONIA HURRA FOR OPPONENTS
CIVIL APPLICATION NO 1 OF 2006
PARTY IN PERSON
MRS. SWATI SOPARKAR
DR. SONIA HURRA
---------
CORAM HONORABLE MR. JUSTICE R S GARG
DATED 9-1-2006
COMMON ORAL ORDER
Mrs. Swati Soparkar, learned cousnel for the applicant informs the court that as Dena Bank is no more a creditor of the company under liquidation , she be allowed to withdraw the application submitted for and on behalf of M/s Core Healthcare Limited.
Dr. Sonia Hurra, learned counsel appearing for Dena Bank has no objection.
The Company application is allowed to be withdrawn. It is accordingly disposed of. Notice is discharged. Ad interim relief granted earlier shall stand vacated.
O J Civil Appliction No 1 of 2006 is an application filed by on Mr. pankaj S Modi seeking certain relief against M/s Core Healthcare Limited, being one of the shareholders of M/s Core Healthcare Limited, being one of the shareholders of M/s Core Healthcare Limited. As M/s Core Healthcare Limited is withdrawing its application , O J Civil Application No 1 of 2006 cannot be maintained in these proceedings. O J Civil Application No 1 of 2006 is accordingly disposed of. However, the applicant , Mr. Pankaj S Modi would be free to avail of any action as permissible in law.
R S Garg
CIVIL APPLICATION 1 OF 2006 IN COMA 357 AND COMA 383
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD ,
DISTRICT : AHMEDABAD
OJ CIVIL APPLICATION NO 1 OF 2006 IN
COMPANY APPLICATION 357 OF 2005
AND
COMPANY APPLICATION 383 OF 2005
1. PANKAJ S MODY …. APPLICANT
RESIDING AT 2ND FLOOR, JANMANGAL
APT
40 BRAHMAN MITRA MANDAL SOC
AHMEDABAD 380 006 (JOINING AS 3RD PARTY)
VERSUS
CORE HEALTHCARE LTD DEFENDANT
304/307 MEERA MANAN ( ORIGINAL PETITIONER)
NEAR KRUPA PETROL PUMP
GUJARAT COLLEGE ROAD
NEAR PARIMAL RLY CROSS
AHMEDABAD
2 DENA BANK EFENDANT
DENA LAXMI BLD ( ORIGINAL RESPONDENT)
188-A, ASHRAM ROAD
NAVRFANGPURA, AHMEDABAD 380009
CIVIL APPLICATION FOR JOINING AS THIR PARTY IN
THE ABOVE MATTER JOINING AS PARTY IN PERSON
--------------------------------------------
TO
The HONORABLE CHIEF JUSTICE AND OTHER HONORABLE JUSTICES OF HIGH COURT OF GUJARAT.
THE HUMBLE PETITION OF THE PETITIONER ABOVE NAMED:-
MOST RESEPECTFULLY SHEWETH THAT:-
2. Core Healthcare Ltd is referred as Great Bank robber company by a front page article in Indian Express in December 2002 and ranks amongst first twenty bank robbers. ANNEXURE C
shows that the assets are going at distress price. I am informed and understand that Anti Corruption Bureau are investigating Core Healthcare Limited as directed by the Sessions Court in a case filed against the promoters of Core Healthcare Ltd under Inquiry 1 of 2005. The entire demerger exercise is highly suspect and need to be probed in depth involving several independent agencies for investigation for the wellbeing of shareholders of Core Healthcare Ltd and for the well being of genuine creditors of Core Healthcare Ltd .
D. Core Healthcare Ltd's Chairman and Managing Director Mr Sushil Handa (through his then advocate , one Mr. A D Shah ) had informed me in writing in the year 2000 that various issues then raised by me as shareholder (of the said Core Healthcare Ltd in my written notice dated 12-1-2000) would be dealt with at appropriate time . The text of the said notice dated 12-1-2000 is annexed herewith and marked as ANNEXURE H .
http://corehealthcare.blogspot.com/2004_08_01_corehealthcare_archive.html
The relevant contents of their reply dated 21-2-2000 vide para 3 is reproduced as " …. As regards the averments made in the Paras 3,4, 5,7 and 9 of your notice, my client will deal with same at appropriate time and my client reserves his liberty only with a view to stop your client from fishing and roving inquiry. " Thereby, wrongfully postponing answering the said issues. They never did what they had stated. .I humbly submit that it is necessary now to call to for detailed clarification and explanation of the said issues by the said Sushil Handa as the rights of shareholders and creditors of Core Healthcare Ltd are going to be extinguished if not extinguished already.
has been totally omitted by Nirma Ltd( who are taking over Core Healthcare Ltd ) in their scheme of demerger published by them for their shareholders based on whatever Core Healthcare Ltd directors have informed them.The list of suits pending in the court is shown in ANNEXXURE J but excludes disclosure of civil suit 5827 of 2001.
DISTRICT : AHMEDABAD
OJ CIVIL APPLICATION NO 1 OF 2006 IN
COMPANY APPLICATION 357 OF 2005
AND
COMPANY APPLICATION 383 OF 2005
1. PANKAJ S MODY …. APPLICANT
RESIDING AT 2ND FLOOR, JANMANGAL
APT
40 BRAHMAN MITRA MANDAL SOC
AHMEDABAD 380 006 (JOINING AS 3RD PARTY)
VERSUS
CORE HEALTHCARE LTD DEFENDANT
304/307 MEERA MANAN ( ORIGINAL PETITIONER)
NEAR KRUPA PETROL PUMP
GUJARAT COLLEGE ROAD
NEAR PARIMAL RLY CROSS
AHMEDABAD
2 DENA BANK EFENDANT
DENA LAXMI BLD ( ORIGINAL RESPONDENT)
188-A, ASHRAM ROAD
NAVRFANGPURA, AHMEDABAD 380009
CIVIL APPLICATION FOR JOINING AS THIR PARTY IN
THE ABOVE MATTER JOINING AS PARTY IN PERSON
--------------------------------------------
TO
The HONORABLE CHIEF JUSTICE AND OTHER HONORABLE JUSTICES OF HIGH COURT OF GUJARAT.
THE HUMBLE PETITION OF THE PETITIONER ABOVE NAMED:-
MOST RESEPECTFULLY SHEWETH THAT:-
The humble Application of the Applicant above
named:-
1. The applicant is desiring to join as third party and the applicant made a request to the Honorable Justice Shri K.S. Zaveri on 13-12-2005 . The consent was granted as per note in ANNEXURE A . I respectfully submit to the Lordships that I am shareholder of Core Healthcare since 1995 having Registered folio number 80766.A copy of the share certificate is as per ANNEXURE B.
named:-
1. The applicant is desiring to join as third party and the applicant made a request to the Honorable Justice Shri K.S. Zaveri on 13-12-2005 . The consent was granted as per note in ANNEXURE A . I respectfully submit to the Lordships that I am shareholder of Core Healthcare since 1995 having Registered folio number 80766.A copy of the share certificate is as per ANNEXURE B.
2. Core Healthcare Ltd is referred as Great Bank robber company by a front page article in Indian Express in December 2002 and ranks amongst first twenty bank robbers. ANNEXURE C
3. Without getting into the specifics at this stage of my present petition , some of the grounds are briefly narrated as under:-
A. An inquiry has been ordered against the management of Core Healthcare Ltd and their connected persons in light of criminal case pending against them in Sessions court of Ahmedabad since April 2005. ANNEXURE D
B. The demerger contemplates cash outflow of Rs 138 crores and indirect benefit of around Rs 162 crores by Nirma Ltd in their take over of Core Healthcare Ltd by way of demerger route as against an asset valuation of Rs 1000 crores of Core Healthcare Ltd referred to by the respective lawyers counselor of Core Healthcare Ltd in OJCA 106 of 1997 in O J Application 5 of 1997 in American Express Limited versus Core Healthcare Ltd and referred to in the Orders passed by Gujarat High Court in February 1998. The copy of the order is annexed herewith
shows that the assets are going at distress price. I am informed and understand that Anti Corruption Bureau are investigating Core Healthcare Limited as directed by the Sessions Court in a case filed against the promoters of Core Healthcare Ltd under Inquiry 1 of 2005. The entire demerger exercise is highly suspect and need to be probed in depth involving several independent agencies for investigation for the wellbeing of shareholders of Core Healthcare Ltd and for the well being of genuine creditors of Core Healthcare Ltd .
C. The main promoter of Core Healthcare Limited is one Mr. Sushil Handa who is running a company by the name of Claris Life Sciences Ltd through his children and his henchman is one Jatin Jalundhwala. The said Claris Life Sciences Ltd is run form a multi storeyed Building located opposite Doctor House near Parimal Railway Crossing in Ahmedabad. The said
information is annexed as ANNEXURE G
D. Core Healthcare Ltd's Chairman and Managing Director Mr Sushil Handa (through his then advocate , one Mr. A D Shah ) had informed me in writing in the year 2000 that various issues then raised by me as shareholder (of the said Core Healthcare Ltd in my written notice dated 12-1-2000) would be dealt with at appropriate time . The text of the said notice dated 12-1-2000 is annexed herewith and marked as ANNEXURE H .
http://corehealthcare.blogspot.com/2004_08_01_corehealthcare_archive.html
The relevant contents of their reply dated 21-2-2000 vide para 3 is reproduced as " …. As regards the averments made in the Paras 3,4, 5,7 and 9 of your notice, my client will deal with same at appropriate time and my client reserves his liberty only with a view to stop your client from fishing and roving inquiry. " Thereby, wrongfully postponing answering the said issues. They never did what they had stated. .I humbly submit that it is necessary now to call to for detailed clarification and explanation of the said issues by the said Sushil Handa as the rights of shareholders and creditors of Core Healthcare Ltd are going to be extinguished if not extinguished already.
E. There is strong reason to protect the interest of the shareholders of Core HealthCare Ltd as the identity of share holders of Core Healthcare is going to be eliminated in light of such demerger route being announced and without their voice being heard by all the parties involved.
F. There are various litigations pending in various courts (in Ahmedabad) between Core Healthcare Ltd, its employees ,its creditors and its shareholders and the present litigant as a shareholder of the said company. Further ,reference of my Civil Suit No 5827 of 2001 (pending in City Civil Court of Ahmedabad and acknowledged by Reserve Bank of India as per ANNEXURE I )
http://reservebankofindiaongtb.blogspot.com/2005_10_21_reservebankofindiaongtb_archive.html
F. There are various litigations pending in various courts (in Ahmedabad) between Core Healthcare Ltd, its employees ,its creditors and its shareholders and the present litigant as a shareholder of the said company. Further ,reference of my Civil Suit No 5827 of 2001 (pending in City Civil Court of Ahmedabad and acknowledged by Reserve Bank of India as per ANNEXURE I )
http://reservebankofindiaongtb.blogspot.com/2005_10_21_reservebankofindiaongtb_archive.html
G. The proposed demerger will cause irreparable damage to the rights of the Litigant appearing as Party in Person and to other genuine creditors of Core Healthcare Ltd as the demerger will enable the banks (Oriental Bank of Commerce and Global Trust Bank Ltd) , and the directors of Core Healthcare to go scot free . Such proposed demerger will render the pending litigations also redundant thereby rendering injustice not only to the present Petitioner but also other shareholders and genuine creditors of said Core Healthcare Ltd.
H. I believe that a charge of Rs. Eleven Crore created by Core Healthcare Ltd prior to August 1998 and hence, there was no reason for Jatin Jalundhwala to create a fresh charge of Rs Twelve and half crores subsequently in 1999 on the assets of M/s Rupmangalam Investment Pvt Ltd , M/s Flovin Plastics Pvt Ltd, M/s Dhanyushya. Financial Ltd.. This shows that this was done in collusion with the concerned officers as well as the management of Global Trust Bank Limited to Core HealthCare Limited to dilute the security and / or let the responsible directors of Core HealthCare Limited and Dhanyushaya Financial Limited to avoid facing huge liabilities. I had called for from the management of Oriental Bank of Commerce to furnish a copy of notarized affidavit either confirming that the cgarge of Rs. Eleven crores was created prior to August 1998 on assets of Core Healthcare Limited. I had called for detailed replies from OrientalBank of Commerce by sending several e-mails and they have evaded to give such detailed replies and findings and their silence shows that there is collusion between Core Healthcare management and the management of Oriental Bank of Commerce.
I. The demerger route would have enabled Nirma Ltd to enjoy enormous tax benefit to Nirma Ltd at the cost of shareholders of Core HealthCare Ltd and the management of Core Healthcare Ltd as a shrewd businessman would have done everything to see that they would have negotiated far better offer from Nirma Ltd for the benefit of the shareholders of Core HealthCare Ltd and the amount of the deal shows that they have not done hard bargaining or it seems possibly there is private arrangement. In the wider interest of all concerned shareholders and society ,such practice needs to be curbed by first lifting the corporate veil of Core Healthcare Ltd and its various group companies in totality.
J. In this way, the demerger scheme is not in the interest of share holders of Core Healthcare Ltd as it camouflages the misleading conduct ,acts , omissions , intentions of Core Healthcare Ltd's promoters, their agents and professional advisers.
K. I have come to understand recently that Mrs. Swati Soparkar , practicing advocate of Gujarat High Court of Core HealthCare Limited on 25-10-2005 , Mrs. Swati Soparkar, (as such advocate ) filed Company Application 358 of 2005(ANNEXURE K) on behalf of Nirma Ltd and filed Company Application 383 of 2005 (ANNEXURE L) on behalf of Core Healthcare Limited on 25-11-2005. I believe that Mrs. Swati Soparkar was in conflict of interest of situation where she filed the above application. I further believe, she has misled the said Court.
L. I have drawn attention of Dena Bank by emails to some of the issues raised by me to Oriental Bank of Commerce so hta they can necessary action and copy of email to Dena Bank is annexed as per Annexure M.
M. I do understand and verily believe that Core HealthCare Ltd's name has also surfaced in the Volcker Report and being investigated by relevant authorities.
N. I have reason to believe that Core Healthcare Ltd has acquired major shareholding of Span Medicals Ltd and where in Technology Finance Ltd ( once upon a time subsidiary of Core HealthCare Ltd) , Dhanyushaya Financial Ltd, Rupmanglam Investment Pvt Ltd, Flovin Plastics Pvt Ltd, etc have been amalagamated into Span Medicals by misleading and suppressing material facts as Core Health care management in collusion of Jatin Jalundhwala and others are deliberately not disclosing the facts so as to deny my rights and timely justice.
O. I may be allowed to add, amend , alter , modify ,rectify , grounds as and when necessary depending on the circumstances.
4. I most humbly appeal to your Lordships that I shall be allowed to furnish additional background information at future date.
5. I may be permitted to add , modify, alter, application at a future date depending on the circumstances.
6. I humbly and respectfully pray to the Honorable court would be pleased to :-
I. The Petitioner appearing as Party In Person humbly prays to your Lordship that on account of narrations as referred above, the proposed demerger should not be allowed by Core Healthcare Ltd and/or all connected agencies, and/or deferred until compliance of various pending suits and inquiry :-
a. The statements on oath of the present and past management of Core Healthcare Limited , their agents, the professional advisers and their bankers ( in particular Oriental Bank of Commerce and Global Trust Bank Limited) be recorded in this Honorable Court and/or in Sessions Court Inquiry No 1 of 2005 and in Civil Suit 5827/2001 pending in Bhadra Court.
b. That various documentary evidences to be submitted to this Honorable Court by the management of Core Healthcare Ltd as regards what is stated by me in above Paragraphs and as to what is referred in the proceedings of civil suit 5827 of 2001.
c. finally they be cross examined thereon letter in this Honorable Court or alternatively in the Sessions Court in Inquiry Number 1 of 2005 pending against promoters of Core Healthcare Ltd and their bankers.
II. The shares of Core Healthcare Limited as well as their various rights in the company are prohibited for being transferred or used in any manner by Nirma Ltd or any other agencies pending further investigation findings.
III. Core Healthcare Ltd would be given directions as to why charge was created by Core Healthcare on its assets prior to August 1998 by Global Trust Bank or not and what was the specific reason to obtain a fresh charge on the immoveable property of Rupmanglam Investment Pvt Ltd,Flovin Plastics Pvt Ltd in August 1998 and March 1998. Core Healthcare would be called upon to obtain detailed reply from Oriental Bank of Commerce.
IV. Core Healthcare Ltd management would take all necessary action against Handa family and Jatin Jalundwala to recover the loss suffered by the company especially when there is heavy loss in realization on proposed demerger as Nirma Limited at distress value.
V. Core Healthcare Ltd management along with Sushil Hand is called upon to take legal action against all the concerned agencied and bankers whoi have given consent to propose sale of assets at distress value to Nirma Limited and make them reimburse to Core Healthcare Ltd such loss on account of dpletion suffered by Core Healthcare Limited.
VI. Be pleased to grant such other and further reliefs as may be deemed just and proper in the facts and circumstances of the case.
AND FOR THIS ACT OF KINDNESS AND JUSTICE THE
PETTITONER AS IN DUTY BOUND SHALL EVER PRAY
PLACE : AHMEDABAD
DATE:- 12-2005
PETTITONER AS IN DUTY BOUND SHALL EVER PRAY
PLACE : AHMEDABAD
DATE:- 12-2005
PANKAJ S MODY PARTY IN PERSON
I , Pankaj Sureshchandra Mody, aged 58 , adult residing at 2nd Floor , Janmangal Apartment , 40 Brahman Mitra Mandal Society , Paldi , Ahmedabad 380 006 , joining as Party In Person herein do hereby solemnly affirms and state on oath that what is stated herein above are true to best of my knowledge , information and belief and I believe the same to be true and correct.
Solemnly , affirmed at Ahmedabad on this day of December 2005
----------
DEPONENT
PARTY IN PERSON
¶ 3:58 AM 0 comments Solemnly , affirmed at Ahmedabad on this day of December 2005
----------
DEPONENT
PARTY IN PERSON
Tuesday, October 25, 2005
DID ARCIL SELL CORE PHARMA FOR A SONG ?
Article In Financial Express
Did Arcil sell Core Pharma for a song?
Jyotsna BhatnagarJyotsna Bhatnagar
Ahmedabad, Oct 24
According to sources close to the deal, while Nirma is offering Rs138 crore for the assets as the cash component of the transaction, the additional liability amounts to another Rs 80 crore. The offloading of promoters shares of around 50% to the banks and FIs would mop up another Rs30-50 crore. The total deal would net around Rs260-270 crore.
However, pharma experts say that this tantamounts to a distress sale given the fact that setting up a similar plant today would cost nothing less than Rs 700 crore.
Even though the machines installed at the CPL facility are old now, the technology is still relevant and by that yardstick, the assets should have comfortably fetched anywhere around Rs 500 crore, said an analyst.
What is more, there has been no capacity addition in the LVPs and syringes sector in the country since 1996 thereby increasing the value of the product immensely.
In the interim, ARCIL appointed the original CPL promoters as the custodians for supervising the day-to-day operations of the facility before it was actually handed over to the new promoters.
CPL has a capacity of 24 crore units for LVPs making it among the largest in the world while its syringe facility has a capacity of 48 crore units.
In addition, the small volume parentals capacity is 60 crore units. All these facilities are located within a unified complex spread over 600 acres of land.
Furthermore, with CPL going in for plant upgradation some years ago to conform to CGMP specifications (current good manufacturing practices), the export market for CPL products is huge as its products can enter the markets of developed countries also.
In view of all this, it is really shocking that CPL’s assets are going so cheaply, said an industry expert.
The filing of the application in the court which was scheduled for Tuesday but had to be postponed on account of some last minute discussions for a day or two would have to be followed up by crystallisaion of liability and approval of the shareholders before Nirma becomes the promoter of CPL’s LVP and syringe facilities. The process is expected to take around two months more.
Apart from these assets, CPL also has a pharma business which has been divested by ARCIL to the Delhi-based Abris while its 20 mega watt captive power station could fetch another Rs25 crore or so.
http://www.financialexpress.com/fe_full_story.php?content_id=106632
¶ 7:18 AM 0 comments
Did Arcil sell Core Pharma for a song?
Jyotsna BhatnagarJyotsna Bhatnagar
Ahmedabad, Oct 24
Even as the Asset Reconstruction Company of India Limited (Arcil), ailing Core Pharmaceuticals Limited (CPL) and Nirma file an application in the Gujarat High Court for a formal demerger in the next day or two, a penultimate step towards making Nirma the owner of CPL’s facility, doubts are already being cast over whether it has been a distress sale of assets of a large defaulter by Arcil.
According to sources close to the deal, while Nirma is offering Rs138 crore for the assets as the cash component of the transaction, the additional liability amounts to another Rs 80 crore. The offloading of promoters shares of around 50% to the banks and FIs would mop up another Rs30-50 crore. The total deal would net around Rs260-270 crore.
However, pharma experts say that this tantamounts to a distress sale given the fact that setting up a similar plant today would cost nothing less than Rs 700 crore.
Even though the machines installed at the CPL facility are old now, the technology is still relevant and by that yardstick, the assets should have comfortably fetched anywhere around Rs 500 crore, said an analyst.
What is more, there has been no capacity addition in the LVPs and syringes sector in the country since 1996 thereby increasing the value of the product immensely.
In the interim, ARCIL appointed the original CPL promoters as the custodians for supervising the day-to-day operations of the facility before it was actually handed over to the new promoters.
CPL has a capacity of 24 crore units for LVPs making it among the largest in the world while its syringe facility has a capacity of 48 crore units.
In addition, the small volume parentals capacity is 60 crore units. All these facilities are located within a unified complex spread over 600 acres of land.
Furthermore, with CPL going in for plant upgradation some years ago to conform to CGMP specifications (current good manufacturing practices), the export market for CPL products is huge as its products can enter the markets of developed countries also.
In view of all this, it is really shocking that CPL’s assets are going so cheaply, said an industry expert.
The filing of the application in the court which was scheduled for Tuesday but had to be postponed on account of some last minute discussions for a day or two would have to be followed up by crystallisaion of liability and approval of the shareholders before Nirma becomes the promoter of CPL’s LVP and syringe facilities. The process is expected to take around two months more.
Apart from these assets, CPL also has a pharma business which has been divested by ARCIL to the Delhi-based Abris while its 20 mega watt captive power station could fetch another Rs25 crore or so.
http://www.financialexpress.com/fe_full_story.php?content_id=106632
Monday, August 23, 2004
Notice served to Core Health Care on 12-01-2000 through J J Patel on behalf of P S Mody
2. You are director of Core Health Care Ltd and you look after the affairs of Core Health Care Ltd and you also are involved in policy matters. Implementation matters and corrective action.
3. (a) You along with the other directors of Core Health Care Ltd by misusing the trust of shareholders reposed in the directors of Core Health Care has diverted a large sum of approximately Rs 39 crores to Technology Finance Ltd since 1996-97 as interest free loan without specifying time period and of no benefit to share holders of Core Health Care Ltd especially when Core Health Care Ltd has been incurring losses, has not declared dividends since long; and has accumulated losses to the tune of Rs 290.00 crores approximately and the company is not in a positon to pay back the interest as well as installments to financial institutions and banks in time. The company management is also not serious in recovering the loans given even when it is facing severe working capital constraints and has suffered huge accumulated losses.
(b) The balance sheet of Technology Finance Ltd for the period ending 31-3-1998 and 31-3-1999 reveal that Mr. Ameet Desai and Mr. Jatin Jalundhwala are the directors of Technology Finance Ltd. INcidently, both these persons are employees of Core Health Care Ltd drawintg high remuneration from Core Health CVare Ltd and it is naturally expected from you as director of Core health Care Ltd to demand job performance from Mr. Ameet Desai and Mr. Jatin Jalundhwala when such large funds are put at their disposal in Technology Finance Ltd and ask them to repay with interest when Core Health Care ltd itself is on fire (as accumulated losses are to the tune of Rs 290 crores , non payment of interest and instalemnet on time, severe working capital constraints as per the current audited balance sheet of Core Health Care Ltd.)
© In view of this, you as Director of Core Health Care Ltd shall furnish satisfactory answers to the following questions and what was stand taken by each of the directos in moving various resolutions pertaining to interest free loan to Technology Finance Ltd:-
• Why such large funds amounting to Rs 39 crores as interest free loan were given to Technology Finance Ltd?
• How this has benefited Core Health Care ?
• Why the repayment of funds was not satisfied ?
• As the funds are not recovered for almost over two and half years, what measures are being taken to retrieve the funds?
• Name of the directors who has called back this loans in board meetings and when? What was the stand of other directors ?
• Whether the managing director of Core Health Care has referred in minutes the steps taken by him to recover these funds.
• Is there any corporate governance followed by Board of Directors?
• Has nominee directors of financial institutions insisted the managing dirctor to retrieve these funds back before granting fresh loans or rescheduling the loans as well as accrued interest?
• Whether the directors of Core Health Care have questioned the excess remuneration paid to the Chairman and Managing Director and whether they have raised the issue in board meetings that the CMDis asked to pay back the overdrawn amount immediately and if so, what has been the reply of CMD especially when the company is passing through grave financial crisis as reported in the balance sheet.
4. You as director of Core Health Cre Ltd can persuade Mr. jatin Jalundhwala and Mr. Ameet Desai who are employees of Core Health Care Ltd and ask them to refund Rs 39 crores taken by Technology Finance Ltd when Core Hearth Care Ltd is in shortage of funds. Your company is to take immediate legal action against them so as to recover the said loan in case they are not refunding loadn given to Technology Finance Ltd.
5. No man of common sense and prudence heading a Public Ltd comp[any would ethically think of diverting huge funds to Technology Finance Ltd , when it is of no benefit to the shareholders of the company for such a long period. When your company is facing acute working capital shortage and on other hand you as director of Core Heaalth Care Ltd continue to give interest free loan to tune of Rs 39 crores and do not recover the said amount with interest, then you have conspired with other directors and employees of Core Health Care and have embezzled and have used company’s funds for diversion for malafide intentions. This is nothing short of cheating the shareholders of Core Health Care and such acts and omissions on the part of Chariman and Managing Director and his associates – ccosntitute manareaa and such acts and omissions are reflective of malafide intentions for which shareholder can take appropriate legal action against the Chariman and managing Director and other directors.
6. Your company has taken interst bearingloan of Rs 12.5 crores from Global Trust Bank on illegal mortgage of property coowned by Dhanyushya Financial Ltd along with two other companies. You are aware that Mr. Jatin Jalundhwalla and Mr. Ameet Desai are/were directors of Dhanyushya Financial Ltd at the time of illegal mortgaging of the property to Global Trust Bank for the benefit of Core Health Care Ltd.
7. Be it noted that you as director of Core Health Care shall immediately and fully recover Rs 39 crores along with accrued interest from Technology Finance Ltd and pay off the irregul/overdue loans to financial institutions and bankers immediately so as to eliminate depletion of funds of Core Health Care Ltd instead of asking for fresh funds so as to save interst and principal amount. In case Technology Finance Ltd does not pay back the sum with interst – you shall immediately take legal action on Mr. Jatin Jalundhwala and Mr. Ameet Desai of Technology Finance Ltd. Failure to do so will depict that you have joined hands with Mr. Jatin jalundhwala and Mr. Ameet Desai of Technology Finance Ltd.
8. On one hand Mr. Ameet Desai and Mr. Jatin Jalundhwala are employees of Core Health Care Ltd drawing high remuneration and on other hand they are directors of Technology Finance Ltd as well as Dhanyushya Financial Ltd. This show interconnectedness. Therefore , you in connivance have conspired with other directors and employees in money laundering act and have cheated and have embexzled and siphone nad have diverted company’s funds with malafide intentions and thereby committed fraud and breach of trust. For this act of cheating, breach of trust, embezzlement and diversion of funds , my client shall take legal action against the directors of Core Health Care Ltd and approach SEBI,etc.
9. On one hand , Core health care Ltd gives interest free loan of Rs 39 crores to Technology Finance Ltd (where Mr. Ameet Desai and Mr Jatrin Jalundhwala are directors ) and on other hand you directors accept Rs 12.5 crores interest bearing loan from Global Trust Bank at the instance of Mr. Ameet Desai and Mr. Jatin Jalundhwalla of Dhanyushya Financial Ltd. As a matter of sound business practices, you as director of Core Health Care Ltd would first recall interest free loan of Rs 39.00 crores from Mr. JATIN JALUNDHWALA and Ameet Desai of Technology Finance Ltd before accepting Rs 12.5 crores as interst bearing loan from bank (where once again same Jatin Jalundhwala and Ameet Desai are associated with Dhanyushya Financial Ltd as directors). It is clear that your intentions are malafide. In case you value shareholders rights , you shall give satisfactory reply immediately on receipt of this notice as to why shareholders of Core Health Care need to suffer loss on share value.
10. The employees of Core Health Care in the past with the aid of various connections and with the help of others have used means of coercion, physical and mental injury and torture with a view to silnec my client and his family members. In view of this background, I as advocate of pankaj S Mody, caution that in case you directly or indirectly initiate steps to cause injury and/or harm to my client and /or his various family members and make any attempt to silence and immobilize him to cover up your acts, I shall hold all the directors responsible and shall have no alternative to expose your acts immediately.
11. You shall furnish the current lsit of shareholders and their addresses.
12. Your reply shall reach me within ten days of this notice.
Yours truly,
J.J.Patel
Enclsoures : Xerox copy of shares of Core Heatlh Care owned by Shri Pankaj S Mody
Copy to : M/s Shah and Shah , (auditor of Core Health care Ltd) , Ahmedabad
================================================
FOLLOWING IS THE GIST OF REPLY GIVEN TO THE NOTICE :-
A reply was given by advocate Ashok D Shah on behalf of Core health Care Ltd vide his reply dated 13-02-2000 in response to the notice served to Core Healthcare and Sushil Handa on 12-01-2000
The advocate Shri Ashok D Shah has confirmed in his paragraph 3---that “
Core Health care directors did not have any answer and he had been siphoning the funds from Core Healthcare Ltd for personal use.
¶ 10:56 PM 1 comments
By Registered Post Ad
January 12,2000
1) Core Health Care Ltd
“ CORE TOWERS” NR Parimal Crossing
Ahmedabad 380 006
2) Mr. Sushilkumar Handa, Chariman and Managing Director of Core Health Care Ltd “ CORE TOWERS” Nr. Parimal Crossing
Ahmedabad
Sir,
Under the instructions of my client Shri Pankaj Sureshcnadra Mody, I undersigned Shri J. J. Patel, advocate having his office at 33 Arjun Complex , Naroda and residing at B1 -402, Vishwas Apartments, Sola Railway Crossing, Sola Road, Ahmedabad address this notice to you.
1. My client Shri Pankaj S. Mody is owner of 200 shares of Core Health Care Limited since 1995. My client Shri Pankaj S Mody had purchased 200 shares of Core Health Care Ltd from the market based on the performance and administration and the above shares stand in his name even today. The market price has suffered severe erosion in prices.
January 12,2000
1) Core Health Care Ltd
“ CORE TOWERS” NR Parimal Crossing
Ahmedabad 380 006
2) Mr. Sushilkumar Handa, Chariman and Managing Director of Core Health Care Ltd “ CORE TOWERS” Nr. Parimal Crossing
Ahmedabad
Sir,
Under the instructions of my client Shri Pankaj Sureshcnadra Mody, I undersigned Shri J. J. Patel, advocate having his office at 33 Arjun Complex , Naroda and residing at B1 -402, Vishwas Apartments, Sola Railway Crossing, Sola Road, Ahmedabad address this notice to you.
1. My client Shri Pankaj S. Mody is owner of 200 shares of Core Health Care Limited since 1995. My client Shri Pankaj S Mody had purchased 200 shares of Core Health Care Ltd from the market based on the performance and administration and the above shares stand in his name even today. The market price has suffered severe erosion in prices.
2. You are director of Core Health Care Ltd and you look after the affairs of Core Health Care Ltd and you also are involved in policy matters. Implementation matters and corrective action.
3. (a) You along with the other directors of Core Health Care Ltd by misusing the trust of shareholders reposed in the directors of Core Health Care has diverted a large sum of approximately Rs 39 crores to Technology Finance Ltd since 1996-97 as interest free loan without specifying time period and of no benefit to share holders of Core Health Care Ltd especially when Core Health Care Ltd has been incurring losses, has not declared dividends since long; and has accumulated losses to the tune of Rs 290.00 crores approximately and the company is not in a positon to pay back the interest as well as installments to financial institutions and banks in time. The company management is also not serious in recovering the loans given even when it is facing severe working capital constraints and has suffered huge accumulated losses.
(b) The balance sheet of Technology Finance Ltd for the period ending 31-3-1998 and 31-3-1999 reveal that Mr. Ameet Desai and Mr. Jatin Jalundhwala are the directors of Technology Finance Ltd. INcidently, both these persons are employees of Core Health Care Ltd drawintg high remuneration from Core Health CVare Ltd and it is naturally expected from you as director of Core health Care Ltd to demand job performance from Mr. Ameet Desai and Mr. Jatin Jalundhwala when such large funds are put at their disposal in Technology Finance Ltd and ask them to repay with interest when Core Health Care ltd itself is on fire (as accumulated losses are to the tune of Rs 290 crores , non payment of interest and instalemnet on time, severe working capital constraints as per the current audited balance sheet of Core Health Care Ltd.)
© In view of this, you as Director of Core Health Care Ltd shall furnish satisfactory answers to the following questions and what was stand taken by each of the directos in moving various resolutions pertaining to interest free loan to Technology Finance Ltd:-
• Why such large funds amounting to Rs 39 crores as interest free loan were given to Technology Finance Ltd?
• How this has benefited Core Health Care ?
• Why the repayment of funds was not satisfied ?
• As the funds are not recovered for almost over two and half years, what measures are being taken to retrieve the funds?
• Name of the directors who has called back this loans in board meetings and when? What was the stand of other directors ?
• Whether the managing director of Core Health Care has referred in minutes the steps taken by him to recover these funds.
• Is there any corporate governance followed by Board of Directors?
• Has nominee directors of financial institutions insisted the managing dirctor to retrieve these funds back before granting fresh loans or rescheduling the loans as well as accrued interest?
• Whether the directors of Core Health Care have questioned the excess remuneration paid to the Chairman and Managing Director and whether they have raised the issue in board meetings that the CMDis asked to pay back the overdrawn amount immediately and if so, what has been the reply of CMD especially when the company is passing through grave financial crisis as reported in the balance sheet.
4. You as director of Core Health Cre Ltd can persuade Mr. jatin Jalundhwala and Mr. Ameet Desai who are employees of Core Health Care Ltd and ask them to refund Rs 39 crores taken by Technology Finance Ltd when Core Hearth Care Ltd is in shortage of funds. Your company is to take immediate legal action against them so as to recover the said loan in case they are not refunding loadn given to Technology Finance Ltd.
5. No man of common sense and prudence heading a Public Ltd comp[any would ethically think of diverting huge funds to Technology Finance Ltd , when it is of no benefit to the shareholders of the company for such a long period. When your company is facing acute working capital shortage and on other hand you as director of Core Heaalth Care Ltd continue to give interest free loan to tune of Rs 39 crores and do not recover the said amount with interest, then you have conspired with other directors and employees of Core Health Care and have embezzled and have used company’s funds for diversion for malafide intentions. This is nothing short of cheating the shareholders of Core Health Care and such acts and omissions on the part of Chariman and Managing Director and his associates – ccosntitute manareaa and such acts and omissions are reflective of malafide intentions for which shareholder can take appropriate legal action against the Chariman and managing Director and other directors.
6. Your company has taken interst bearingloan of Rs 12.5 crores from Global Trust Bank on illegal mortgage of property coowned by Dhanyushya Financial Ltd along with two other companies. You are aware that Mr. Jatin Jalundhwalla and Mr. Ameet Desai are/were directors of Dhanyushya Financial Ltd at the time of illegal mortgaging of the property to Global Trust Bank for the benefit of Core Health Care Ltd.
7. Be it noted that you as director of Core Health Care shall immediately and fully recover Rs 39 crores along with accrued interest from Technology Finance Ltd and pay off the irregul/overdue loans to financial institutions and bankers immediately so as to eliminate depletion of funds of Core Health Care Ltd instead of asking for fresh funds so as to save interst and principal amount. In case Technology Finance Ltd does not pay back the sum with interst – you shall immediately take legal action on Mr. Jatin Jalundhwala and Mr. Ameet Desai of Technology Finance Ltd. Failure to do so will depict that you have joined hands with Mr. Jatin jalundhwala and Mr. Ameet Desai of Technology Finance Ltd.
8. On one hand Mr. Ameet Desai and Mr. Jatin Jalundhwala are employees of Core Health Care Ltd drawing high remuneration and on other hand they are directors of Technology Finance Ltd as well as Dhanyushya Financial Ltd. This show interconnectedness. Therefore , you in connivance have conspired with other directors and employees in money laundering act and have cheated and have embexzled and siphone nad have diverted company’s funds with malafide intentions and thereby committed fraud and breach of trust. For this act of cheating, breach of trust, embezzlement and diversion of funds , my client shall take legal action against the directors of Core Health Care Ltd and approach SEBI,etc.
9. On one hand , Core health care Ltd gives interest free loan of Rs 39 crores to Technology Finance Ltd (where Mr. Ameet Desai and Mr Jatrin Jalundhwala are directors ) and on other hand you directors accept Rs 12.5 crores interest bearing loan from Global Trust Bank at the instance of Mr. Ameet Desai and Mr. Jatin Jalundhwalla of Dhanyushya Financial Ltd. As a matter of sound business practices, you as director of Core Health Care Ltd would first recall interest free loan of Rs 39.00 crores from Mr. JATIN JALUNDHWALA and Ameet Desai of Technology Finance Ltd before accepting Rs 12.5 crores as interst bearing loan from bank (where once again same Jatin Jalundhwala and Ameet Desai are associated with Dhanyushya Financial Ltd as directors). It is clear that your intentions are malafide. In case you value shareholders rights , you shall give satisfactory reply immediately on receipt of this notice as to why shareholders of Core Health Care need to suffer loss on share value.
10. The employees of Core Health Care in the past with the aid of various connections and with the help of others have used means of coercion, physical and mental injury and torture with a view to silnec my client and his family members. In view of this background, I as advocate of pankaj S Mody, caution that in case you directly or indirectly initiate steps to cause injury and/or harm to my client and /or his various family members and make any attempt to silence and immobilize him to cover up your acts, I shall hold all the directors responsible and shall have no alternative to expose your acts immediately.
11. You shall furnish the current lsit of shareholders and their addresses.
12. Your reply shall reach me within ten days of this notice.
Yours truly,
J.J.Patel
Enclsoures : Xerox copy of shares of Core Heatlh Care owned by Shri Pankaj S Mody
Copy to : M/s Shah and Shah , (auditor of Core Health care Ltd) , Ahmedabad
================================================
FOLLOWING IS THE GIST OF REPLY GIVEN TO THE NOTICE :-
A reply was given by advocate Ashok D Shah on behalf of Core health Care Ltd vide his reply dated 13-02-2000 in response to the notice served to Core Healthcare and Sushil Handa on 12-01-2000
The advocate Shri Ashok D Shah has confirmed in his paragraph 3---that “
as regards the averments made in Para 3, 4,5,6,7 and 9 of the notice dated 12-01-2000 , my client will deal with the same at the appropriate time…. "
Core Health care directors did not have any answer and he had been siphoning the funds from Core Healthcare Ltd for personal use.
Friday, June 04, 2004
GREAT BANK ROBBERY ARTICLE ON CORE HEALTH CARE AS APPEARING IN INDIAN EXPRESS ON 7-12-2002
annexure : article of GREAT iNDIAN BANK ROBBERY APPEARED IN INDIAN EXPRESS ON 7-12-2002 FRONT PAGE
THE GREAT INDIAN BANK ROBBERY - 7
Maker of IV fluids drains banks, now needs a drip
Core’s diagnosis is disturbing but it’s putting up a brave face
JYOTSNA BHATNAGAR & SAMAR HALARNKAR
AHMEDABAD, DELHI, DECEMBER 6: The plush 10-storey tower gleams in the winter sun of downtown Ahmedabad. A hour away in Sachana, the 600-acre factory is abuzz with the activity of 2,000 workers. And back home in Ahmedabad, the spacious bungalow with its swimming pool and airconditioning screams of achievement.
It’s hard then to believe that Sushil Handa — always immaculately attired and soft spoken — owns the company that is one of India’s largest defaulters. The drive and ambition of this Punjabi MBA made Core Healthcare Asia’s largest producer of intravenous fluid (IV) just seven years ago. It also had a reputation for pre-paying loans.
Today, some significant wrong turns and questionable dealings later Core is a sick unit that does not even pay interest on its huge debts to a consortium of Indian and foreign banks. Its restructuring package is pending with its bankers.
As the new law allowing banks to seize assets of defaulters sets off a frenzy of activity, Handa is seemingly unperturbed.
UNPAID: RS 751 CR
‘I am not a stumbling block in the restructuring of my company. I am working with all lenders on possible alternatives.’’
Sushil Handa, Chairman
‘‘Unlike many other defaulters, we’re in a growth industry,’’ says the man once in great demand as a speaker at management schools. ‘‘All through the past five years when we were neck deep in debt, we maintained our leadership in the IV fluids industry with a 45 per cent market share.’’
Unlike most of India’s top defaulters, he insists, Core’s reneging on loans hasn’t ever been a business issue. That’s where his bankers vehemently disagree.
Bankers say Handa, using his considerable presence, got more money than he needed, diversified into unrelated businesses like manufacturing syringes, got into a hole trying to sell products in countries without financial systems, like Sudan, and finally misused funds.
Handa actually had a lot going right for him. The comatose markets didn’t affect him. ‘‘The IV fluids market is huge, his technology was right and he has lots of ideas,’’ says one Mumbai banker.
Another banker alleges that in 1995, when the company was struggling for working capital and growing, Rs 85 crore went out, among other things to buy out a company called Core International. Bankers allege this was the money that found its way to his brother Sunil Handa — an IIM graduate and son-in-law of former vice president Krishan Kant — when the two went their own way. Finance Director Jatin Jhunjhunwala doesn’t deny this outflow, but his explanation is evasive.
When Core Healthcare was neck deep in financial problems, a banker recalls how after visiting the plant, lender representatives got onto the same flight as Handa and his financial head for a lenders’ meeting in Mumbai. ‘‘Both of them flew business class, while all the lenders were in economy,’’ he says.
Handa may want the best for himself and his business—characterised not by rusting plants and layoffs, but by a world-class factory and happy work- ers—but it might all be a bit too much in these troubled times.
HOW THEY TOOK THE MONEY
As a company that started with a seed capital for Rs 4.5 crore in 1988 and grew 25 per cent the first three years, Core was a high flyer. A first-generation entrepreneur, Handa began taking loans for expansion with the 1991 liberalisation.
Core had an impeccable reputation of pre-paying loan instalments. Not surprisingly, when it borrowed Rs 750 crore in 1995 to set up the plant at Sachana, lenders like IDBI, IFCI and ICICI were only too happy to oblige.
CORE ISSUES
“Our debts are partly because of the lack of accountability of the same system that’s taking us to task for defaulting.”
Sushil Handa,
Chairman, Core Healthcare
‘‘ The time and cost overruns incurred in the Rs 891-crore expansion-cum-diversification programme adversely affected Core’s profitability.’’
An ICRA report
“We did try to help Core by restructuring debts. But now we have categorised all of them as NPAs.”
A bank representative
EXPERT TAKE
“These companies have been holding the country to ransom. I am glad that a breakthrough has been made in the form of the Bill since even the SC refused to go into the issue.’’
H.D. Shourie
Common Cause
‘‘While the intention behind the ordinance is good, the mechanisms worked out are wrong. I fear small companies with debt liabilities will be forced to make distress sales.’’
Gopal Krishna
Company Secretary,
JCT Electronics
The objective was to create huge capacities. Handa dazzled foreign banks with his plans and grasp of his business. A global depository receipt issue followed. ‘‘He got more money than he needed,’’ says a banker.
Jhunjhunwala’s explanation: ‘‘This is an accounting policy we have adopted whereby gross realisation value is greater than net realisation.’’ The discounts, he adds on his own, are given to independent distributors not connected to the company. At the end of the day, Core’s working capital got inextricably stuck. ‘‘As a first generation entrepreneur, Handa aspired for too much too soon and bit off much more than he could chew,’’ admits a top company executive on condition of anonymity.
Bankers say Handa’s estimates of his business and how he wanted to go about it went awry. Add to that the diversion of money and Core was headed for the default doghouse.
AND HOW THEY GOT AWAY
Core took high-interest loans (between 20-25 per cent) to keep going. ‘‘And once we got into this trap, we could never surface,’’ a company official says.
The banks see it very differently. Core started exports without letters of credit to countries where exports were not backed by RBI guarantees (Export Credit Guarantee Scheme). The 1999-2000 balance sheet, for instance, shows Rs 60.42 crore as ‘‘export receivables’’ written off. Jhunjhunwala says the RBI approved a Rs 52 crore write-off. And the balance? That was advance provision for write-offs.
The company will not accept blame. Indeed they blame the creditors, saying they requested debt restructuring as far back as 1997, but ‘‘delay in timely action’’, as one official puts it, worsened the situation. They also blame a wrong analysis that led to the setting up of a captive-power plant, believing the Gujarat Electricity Board could not meet their 22 MW power requirements.
But the Board gave the company all the power they wanted. ‘‘That’s when our Rs 100 crore investment on the power project became a dead investment,’’ says Nayan Rao, director and member of the Core Board. Rao admits there has been cannibalisation and some employees were sacked but ‘‘these are insignificant and have nothing to do with financial hardships of the company.’’
Indeed, on a visit to the factory, workers seem happy, with most getting salaries above market rates. Loyalty is strong as well. Even though 1,000 of the workforce is on contract, 600 have been here for the last decade.
Despite the rosiness, in March 2001, Core reported a 50 per cent erosion in its network and unsurprisingly, approached the BIFR. The case for its restructuring is presently with the BIFR. Handa alleges that though more than a year has elapsed since the last BIFR hearing in November 2001, the banks have not yet submitted their statutory audit report, which he says should take a month’s time.
‘‘At the rate of 19 per cent interest, that would account for an almost Rs 16 crore interest loss on the Rs 750 crore NPAs piled up by us,’’ says Handa. ‘‘And this is an invisible loss because of lack of accountability of the same system that is taking us to task for defaulting.’’
Today, Handa hopes to close the year with an operating profit of about Rs 15 crore after posting a Rs 12 crore operating profit for 2001-02 and Rs 14 crore before that. ‘‘I am a professional manager and will do everything possible to build the value of the company.’’ Now, if only his lenders agreed.
(With George Mathew in Mumbai)
¶ 11:43 PM 6 comments THE GREAT INDIAN BANK ROBBERY - 7
Maker of IV fluids drains banks, now needs a drip
Core’s diagnosis is disturbing but it’s putting up a brave face
JYOTSNA BHATNAGAR & SAMAR HALARNKAR
AHMEDABAD, DELHI, DECEMBER 6: The plush 10-storey tower gleams in the winter sun of downtown Ahmedabad. A hour away in Sachana, the 600-acre factory is abuzz with the activity of 2,000 workers. And back home in Ahmedabad, the spacious bungalow with its swimming pool and airconditioning screams of achievement.
It’s hard then to believe that Sushil Handa — always immaculately attired and soft spoken — owns the company that is one of India’s largest defaulters. The drive and ambition of this Punjabi MBA made Core Healthcare Asia’s largest producer of intravenous fluid (IV) just seven years ago. It also had a reputation for pre-paying loans.
Today, some significant wrong turns and questionable dealings later Core is a sick unit that does not even pay interest on its huge debts to a consortium of Indian and foreign banks. Its restructuring package is pending with its bankers.
As the new law allowing banks to seize assets of defaulters sets off a frenzy of activity, Handa is seemingly unperturbed.
UNPAID: RS 751 CR
‘I am not a stumbling block in the restructuring of my company. I am working with all lenders on possible alternatives.’’
Sushil Handa, Chairman
‘‘Unlike many other defaulters, we’re in a growth industry,’’ says the man once in great demand as a speaker at management schools. ‘‘All through the past five years when we were neck deep in debt, we maintained our leadership in the IV fluids industry with a 45 per cent market share.’’
Unlike most of India’s top defaulters, he insists, Core’s reneging on loans hasn’t ever been a business issue. That’s where his bankers vehemently disagree.
Bankers say Handa, using his considerable presence, got more money than he needed, diversified into unrelated businesses like manufacturing syringes, got into a hole trying to sell products in countries without financial systems, like Sudan, and finally misused funds.
Handa actually had a lot going right for him. The comatose markets didn’t affect him. ‘‘The IV fluids market is huge, his technology was right and he has lots of ideas,’’ says one Mumbai banker.
Another banker alleges that in 1995, when the company was struggling for working capital and growing, Rs 85 crore went out, among other things to buy out a company called Core International. Bankers allege this was the money that found its way to his brother Sunil Handa — an IIM graduate and son-in-law of former vice president Krishan Kant — when the two went their own way. Finance Director Jatin Jhunjhunwala doesn’t deny this outflow, but his explanation is evasive.
When Core Healthcare was neck deep in financial problems, a banker recalls how after visiting the plant, lender representatives got onto the same flight as Handa and his financial head for a lenders’ meeting in Mumbai. ‘‘Both of them flew business class, while all the lenders were in economy,’’ he says.
Handa may want the best for himself and his business—characterised not by rusting plants and layoffs, but by a world-class factory and happy work- ers—but it might all be a bit too much in these troubled times.
HOW THEY TOOK THE MONEY
As a company that started with a seed capital for Rs 4.5 crore in 1988 and grew 25 per cent the first three years, Core was a high flyer. A first-generation entrepreneur, Handa began taking loans for expansion with the 1991 liberalisation.
Core had an impeccable reputation of pre-paying loan instalments. Not surprisingly, when it borrowed Rs 750 crore in 1995 to set up the plant at Sachana, lenders like IDBI, IFCI and ICICI were only too happy to oblige.
CORE ISSUES
“Our debts are partly because of the lack of accountability of the same system that’s taking us to task for defaulting.”
Sushil Handa,
Chairman, Core Healthcare
‘‘ The time and cost overruns incurred in the Rs 891-crore expansion-cum-diversification programme adversely affected Core’s profitability.’’
An ICRA report
“We did try to help Core by restructuring debts. But now we have categorised all of them as NPAs.”
A bank representative
EXPERT TAKE
“These companies have been holding the country to ransom. I am glad that a breakthrough has been made in the form of the Bill since even the SC refused to go into the issue.’’
H.D. Shourie
Common Cause
‘‘While the intention behind the ordinance is good, the mechanisms worked out are wrong. I fear small companies with debt liabilities will be forced to make distress sales.’’
Gopal Krishna
Company Secretary,
JCT Electronics
The objective was to create huge capacities. Handa dazzled foreign banks with his plans and grasp of his business. A global depository receipt issue followed. ‘‘He got more money than he needed,’’ says a banker.
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’’.
Jhunjhunwala’s explanation: ‘‘This is an accounting policy we have adopted whereby gross realisation value is greater than net realisation.’’ The discounts, he adds on his own, are given to independent distributors not connected to the company. At the end of the day, Core’s working capital got inextricably stuck. ‘‘As a first generation entrepreneur, Handa aspired for too much too soon and bit off much more than he could chew,’’ admits a top company executive on condition of anonymity.
Bankers say Handa’s estimates of his business and how he wanted to go about it went awry. Add to that the diversion of money and Core was headed for the default doghouse.
AND HOW THEY GOT AWAY
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’’.
Core took high-interest loans (between 20-25 per cent) to keep going. ‘‘And once we got into this trap, we could never surface,’’ a company official says.
The banks see it very differently. Core started exports without letters of credit to countries where exports were not backed by RBI guarantees (Export Credit Guarantee Scheme). The 1999-2000 balance sheet, for instance, shows Rs 60.42 crore as ‘‘export receivables’’ written off. Jhunjhunwala says the RBI approved a Rs 52 crore write-off. And the balance? That was advance provision for write-offs.
The company will not accept blame. Indeed they blame the creditors, saying they requested debt restructuring as far back as 1997, but ‘‘delay in timely action’’, as one official puts it, worsened the situation. They also blame a wrong analysis that led to the setting up of a captive-power plant, believing the Gujarat Electricity Board could not meet their 22 MW power requirements.
But the Board gave the company all the power they wanted. ‘‘That’s when our Rs 100 crore investment on the power project became a dead investment,’’ says Nayan Rao, director and member of the Core Board. Rao admits there has been cannibalisation and some employees were sacked but ‘‘these are insignificant and have nothing to do with financial hardships of the company.’’
Indeed, on a visit to the factory, workers seem happy, with most getting salaries above market rates. Loyalty is strong as well. Even though 1,000 of the workforce is on contract, 600 have been here for the last decade.
Despite the rosiness, in March 2001, Core reported a 50 per cent erosion in its network and unsurprisingly, approached the BIFR. The case for its restructuring is presently with the BIFR. Handa alleges that though more than a year has elapsed since the last BIFR hearing in November 2001, the banks have not yet submitted their statutory audit report, which he says should take a month’s time.
‘‘At the rate of 19 per cent interest, that would account for an almost Rs 16 crore interest loss on the Rs 750 crore NPAs piled up by us,’’ says Handa. ‘‘And this is an invisible loss because of lack of accountability of the same system that is taking us to task for defaulting.’’
Today, Handa hopes to close the year with an operating profit of about Rs 15 crore after posting a Rs 12 crore operating profit for 2001-02 and Rs 14 crore before that. ‘‘I am a professional manager and will do everything possible to build the value of the company.’’ Now, if only his lenders agreed.
(With George Mathew in Mumbai)
