(a) whether a study on restructuring/revival of IDBI led TCOs including BITCO was made
by IDBI;
(b) if so, the salient findings of the study and the measures taken for restructuring
of the TCOs;
(c) whether salaries and other statutory payments like P.F. remained unpaid for
long to the employees of BITCO;
(d) if so, the action taken by the Government to clear their dues;
(e) whether restructuring of IDBI by granting financial packages is contemplated; and
(f) if so, the details thereof?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE AND COMPANY AFFAIRS
(SHRI ANANDRAO VITHOBA ADSUL):
(a) The Industrial Development Bank of India (IDBI) had appointed the Moores Rowland
consulting Pvt Ltd. (MRCL) to carry out an independent study on the viability of five
IDBI-led Technical Consultancy Organisations (TCOs) including BITCO.
(b) As reported by IDBI, the salient findings of the study pertaining to Bihar Industrial
& Technical Consultancy Organisation (BITCO), Jammu & Kashmir Industrial & Technical
Consultancy Organisation (J&KITCO), North Eastern Industrial & Technical Consultancy
Organisation (NEITCO), Orissa Industrial & Technical Consultancy Organisation (ORITCO)
and North East Consultancy Organisation (NECON) are indicated in the enclosed statement.
(c) Yes, Sir.
(d) IDBI aiongwith other institutions is a shareholder of TCOs including BITCO and the
day-to-day administration and other staff matters including payment of salaries and PF dues
is the sole responsibility of each individual TCO.
(e) Government is contemplating to repeal the IDBI Act, 1964 and convert IDBI into a
company under the Companies Act, 1956. Accordingly,Government has decided to corporatise
Industrial Development Bank of India and grant it a banking licence. A Bill,
Industrial Development Bank (Transfer of undertaking and Repeal) Bill 2002, has been introduced
in December, 2002 in Lok Sabha. The Bill has been referred to the Standing Committee on
Finance for examination.
(f) At the time of introduction of the Bill, it was recognized that the liability
developing on the IDBI in terms of the differential rate of interest between its earlier
borrowings and the current borrowings would need to be separately addressed by Government.
Accordingly, in meetings of all stakeholders of IDBI, it has been decided that IDBI would
service the interest on its existing borrowings as on the appointed day at 8% and
the balance, viz, the amount representing the difference between the contracted
rate and 8% would be paid by the Government each year. A provision of Rs.773.00 crore has
been made for this purpose in the Union Budget, 2003-04.
Statement
The summarized findings of the study pertaining to these TCOs are as under:
1. BITCO
Bihar Industrial & Technical Consultancy Organisation (BITCO), situated in one of the more
industrially backward States, has been showing a declining trend in performance over the years
leading to a serious deterioration in its financial position. It has been facing serious
employees problems, including suits filed by the staff against the TCO and vice-versa. It
has excess staff with low productivity levels and morale. BITCO also has large outstanding
liabilities against extremely meager assets. Some creditors have initiated legal action
against the TCO. The internal and external factors impacting its operations indicate that
it would be difficult for it to achieve the sustained viability in the future. MRCL has
categorized BITCO as a non-viable TCO and stated that it might be closed down since, despite
repeated assistance provided by its sponsoring institutions. BITCO had not been able to
establish its viability. As MRCL concluded that BITCO`s sustained viability was in doubt,
it was decided by IDBl to disassociate itself from BITCO.
2. J&KITCO
Jammu & Kashmir Industrial & Technical Consultancy Organisation (J&KITCO) has been
adversely impacted by external as well as internal factors. The TCO has a negative net worth
and sizeable outstanding liabilities, which are far in excess of its assets. Legal notice
has been served on the TCO by a creditor. These inimical factors would make it difficult
for the TCO to achieve viable operating levels on a sustained basis. Closure seems to be
the only available option for J&KITCO.
3. NEITCO
North Eastern Industrial & Technical Consultancy Organisation {NEITCO) has been facing
serious financial problems including scarcity of working capital and severe competition
from larger private consultant besides the problem of excess staff with low productivity.
In case its creditors agree on a consensus to waive about 80% of their dues, it might be
possible for NEITCO to repay the balance out of its future operations over the next five
years and be a viable TCO. However, in the absence of the requisite accommodation from its
creditors, its closure would be the only available option.
4. ORITCO
Orissa Industrial & Technical Consultancy Organisation (ORITCO) has eroded its net worth
and has built up large outstanding liabilities, which are far in excess of its assets.
SBI has proceeded to recover its assistance through the Debt Recovery Tribunal. The inimical
external and internal factors are likely to adversely impact ORiTCO`s operations in future.
Therefore, for ORITCO too, closure seems to be the only considered option.
5. NECON
North East Consultancy Organisation (NECON) was able to generate profits in the past and
consequently has a positive net worth together with investment of Rs. 20 lakh in bonds.
It has built up a young and enthusiastic team of professionals who have pro-actively
undertaken business development activities to cater to the varied requirements of its
clients. This has generated considerable goodwill. NECON, therefore, appears to have
reasonable future prospects and may not need any substantial infusion of funds
from external sources.NECON, therefore, has a potential for revival.