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The doctor in the death-bed

Shaji Vikraman

THE irony of it all cannot be missed even if it means a casual reading of one of the performance reviews of the sick companies' ``doctor,'' the Board for Industrial and Financial Reconstruction (BIFR).

The review says that when it was set up in 1985, BIFR gave rise to new hope amongst entrepreneurs, workers, financial institutions and banks. However, in less than two decades, the stage has been set for the death of the doctor. The irony is that it the same people in whom BIFR kindled a hope, who now want to give it a burial.

They do not have to wait for long. A Cabinet meeting over the next fortnight will seal the fate of the board besides finalising the structure to be put in place to handle sick companies.

Early this week, the Group of Ministers (GoM) headed by the Finance Minister will have perhaps a final sitting after having arrived at a consensus on scrapping the Sick Industrial Companies Act (SICA).

Apart from finalising the Bill to be introduced in Parliament which will lead to the scrapping of BIFR and the Appellate Authority on Industrial and Financial Reconstruction (AAIFR), the Cabinet will take a view on the setting up of a National Tribunal t o replace the board.

The chorus demanding that the board be closed down is growing, led notably by domestic financial institutions, banks and even Government officials. Earlier, companies were fighting hard to escape the ``doc's'' clutches, even fudging accounts to ensure th at their networth was not eroded to the extent that the board stepped in.

Much later, it turned out to be the other way around. Entrepreneurs wisened up to the fact that being referred to the doc was the best course to adopt, to keep off lenders. A prominent example in recent times being that of Amitabh Bacchan Corporation Ltd (ABCL). The list of the notorious companies in the rogues gallery of BIFR include the Modi firms, a clutch of JK group companies, several family-owned companies and PSUs.

After going through the torturous process of hearings by BIFR, which is a quasi-judicial body and its rehabilitation schemes, domestic lenders with several hundreds of crores at stake, made it clear that an alternative structure would have to be in place . IDBI, which was earlier at the forefront of ``behest lending'', realised belatedly that its competitor, ICICI, was not too badly off in terms of BIFR cases.

With banks also rallying behind, the Government has seen reason. Talks are on in the Government to see how to work out the formation of a National Tribunal which would be endowed with powers of liquidation. This, the Government reckons, would put an end to the multi-court approach adopted by the promoters and company managements.

The Attorney General's opinion is also being sought on the setting up of the tribunal.But BIFR (whose members, a motley crowd of mostly retired babus who move around in white gaddis with flashing red lights) will not give up easily. They say that only terminal cases of companies are referred to them. And they also complain that ``those wicked FIs and banks do not heed to the board's sage advice''.

This weeping act has found sympathisers only in the Labour Ministry which wants only amendments to the SICA. The scrapping of BIFR will also signal trouble for the workers.

Although 2,000 cases are now registered with BIFR, the final act is near. The policy changes which will be carried out after the Cabinet approval will spell great changes in the Indian corporate horizon.