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Doc's sick, patients happy: short-staffed BIFR struggles for survival

L Prashanth in New Delhi

Faced with a manpower crunch at the top, the Board for Industrial and Financial Reconstruction has been able to hold 611 hearings in calendar year 1998, the lowest in the last ten years.

The frequency of hearings, a benchmark for pace of work at the BIFR in dealing with sick companies, is set to get worse with one more director, S L Kapur, who retired a few months back and is on extension till this month-end, will move out.

Then the board will be left with only two members -- P P Chauhan and G Narayanan -- who could constitute one bench to deal with 760 pending companies, the highest backlog accumulated ever.

The restructuring body set up for sick companies in 1987 has been languishing for want of directors since late 1997 when members one after another began to retire. The board has a sanctioned capacity of four benches with two members each and a chairman to allot cases.

''The callous attitude of the government in the appointment of new members has left the board with an increasing backlog,'' sources at the BIFR sources said.

As many as 2,502 companies have registered (including 28 in February 1999 alone) so far, while the BIFR has been able to dispose of 1,742 cases, leaving a burden of 760 cases, including one failed and reopened and four remanded companies.

Under the various sections of the Sick Industries Companies (Special Provisions) Act, the board has been able to dispose of 141 cases in the whole of calendar 1998, the lowest since 1989. At its peak working capacity with four benches, the board had disposed 231 cases in 1993, 273 in 1994, 247 in 1995 and 275 in 1996.

When the board was functioning to its full capacity during 1993-96, it could hold, on an average, over 1000 hearings per year with the peak at 1,552 in 1995, against 611 hearings last year.

Another unsettling data on the sluggish pace of the BIFR, sources said, is the number of cases under process. The number of companies under process has more than doubled to 336 in 1998 against 151 the previous year. In fact, the cases under process were only eight in 1994 and 20 in 1996.

The board has been able to recommend only one draft rehabilitation scheme in the entire year as against 11 in 1997. The restructuring body has so far approved 143 companies, including 12 central public sector units and six state PSUs.

''The only happy party in this state of affairs are those crooked companies who do not want to pay back their dues to their creditors,'' sources said.

No wonder financial institutions are fuming but are helpless as their hundreds of million of rupees are stuck in non-performing assets as ''sick'' companies continue to enjoy the ''hospitality of the BIFR,'' they added.

According to the latest BIFR annual review report, the net worth of the companies registered with the board is Rs 128.93 billion and have accumulated losses of Rs 301.53 billion.

The fate of 129,000 workers stuck in the sick companies is also uncertain due to the pathetic state of affairs at the BIFR, they said.

Dr Charan Wadhwa of the Centre for Policy Research said a revival scheme has to be framed for the BIFR with the first step being the appointment of six full-time directors. ''This would also be a step towards revival of economy,'' a Jawaharlal Nehru University economist said.

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