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ABCL is a sick company, rules BIFR; Big B promises second coming

Byas Anand in New Delhi

The Board for Industrial and Financial Reconstruction today declared Amitabh Bachchan Corporation Limited a sick company and appointed the Industrial Development Board of India or IDBI as the Operating Agency, in spite of objections from secured creditors.

The BIFR bench, comprising members N P Singh and N P Bagchee, noted that the accumulated losses of the entertainment company, launched by matinee idol Amitabh Bachchan, were to the tune of Rs 708.2 million, well above its net worth of Rs 605.2 million as on September 30, 1998.

After more than 90 minutes of hearing, said to be a heated one at times, the board declared ABCL bankrupt under Section 3 (1) (0) of the Sick Industrial Companies (Special Provisions) Act, 1985. Further, the BIFR asked the company to submit its revival proposal to the OA by August 20, 1999.

Importantly, the board stopped the two secured creditors -- Canara Bank and Allahabad Bank -- and others who had approached the Bombay high court, from proceeding any further in their court cases.

''There is a stalemate now between ABCL and its creditors. We are in the process of submitting a revival proposal which will take care of all the creditors,'' M P Narang, consultant for ABCL, said in New Delhi after the hearing.

The two secured creditors raised eight objections against the company from being granted protection under the bankruptcy laws. ''We have been able to fully convince the bench against all objections including one in regard to the existence of ABCL's cassette manufacturing unit at Goregaon, near Bombay, '' Ashok Deorah, corporate advisor, ABCL, said.

The creditors, contrary to their earlier stand, acknowledged the existence of the Goregaon unit and admitted that ABCL is a manufacturing unit since the last four-and-a-half years.

The second objection was about the number of workers on roll in the company. ''We showed the bench that there are over 50 workers, as statutorily required for a company to be declared sick.''

ABCL, hounded by its creditors led by Canara Bank for the recovery of their dues, had approached the BIFR way back in March 1999 seeking protection under the bankruptcy laws.

The company had planned to notch up Rs 10 billion by the year 2000 by marketing products and services covering the entire gamut of the entertainment industry -- from film production and distribution, audio cassettes and video discs, production and marketing of television software, media buying to event- and celebrity-management.

But the fiasco of Miss World contest in Bangalore last year -- ABCL still owes Rs 180 million to Prasar Bharati which owns All India Radio and Doordarshan, the state-owned national television network -- bombing of a series of films and financial mismanagement led the company scurrying for cover under the SICA.

The company's chief executive officer Ajayan, present at the hearing today, said ABCL will continue to be in the entertainment business but will increase its presence in a big way. ''Fortunately, interest burden is only about Rs 10 million a year. We will only have to manage the company better,'' he added.

Amitabh Bachchan himself said efforts are being made to restructure and pump back life into his debt-ridden ABCL.

Minutes after it was declared sick, Bachchan said: ''We are trying to restructure the operations of ABCL and put it back on track.''

However, he refused to divulge details on the internal restructuring being planned for the company, which had an accumulated losses of Rs 708.2 million on September 30, 1998. ''I can not talk about it now.''

He also refused to state whether there were any efforts to move out of the entertainment industry.

ABCL, which is now trying to make a phoenix-like comeback, was floated by the megastar in association with his wife Jaya Bachchan as an entertainment software company. The idea was to venture into various activities of film production, audio / music cassettes and event management.

The Bombay high court had asked Canara Bank, which was seeking recovery of its Rs 100 million loan from ABCL, to obtain BIFR's consent for appointment of a court receiver and launching proceedings.

Under the SICA, 1985, if a company has been registered with the BIFR, no creditor can have right over the assets of the company.

ABCL had approached the BIFR in March 1999 seeking the status of a sick company, claiming its net worth was completely eroded by accumulated losses.

On April 16 last, the Bombay high court had restrained Bachchan from selling off his Bombay bungalow 'Prateeksha' and two flats till the pending loan recovery cases of Canara Bank were disposed of. Bachchan had, however, pleaded that he had mortgaged his bungalow to Sahara India Finance for raising funds for his company.

In the last hearing of the high court, Bachchan's counsel had assured the court that ABCL would repay the entire loan over a period of time.

UNI

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