24 October, 2020

Don't Stub It Out Just Yet

Don't Stub It Out Just Yet
outlookindia.com
-0001-11-30T00:00:00+05:53

ITC's biggest non-enforcement-related problem lies in its high-profile finance company ITC Classic. Once paraded as the pride of the ITC family, it is now an embarrassment, with its incredible Rs 285-crore loss in 1996-97 wiping out its net worth. CRISIL has downgraded Classic's fixed deposit programme from FA, indicating adequate safety, to FB which means inadequate safety for timely payment of principal and interest.

For years, business circles have been abuzz with rumours about something rotten at Classic's core, never mind the sterling results the company announced year after year. But no one perhaps expected the malaise to be so widespread.

ITC initially tried to sell the company to US giant GE Capital, but when that fell through, it decided to stand by Classic. ITC holds 49 per cent of Classic's equity with an investment of Rs 123 crore, which it would not like to see wiped out. It has rushed in a new five-man management team and is injecting Rs 260 crore into the company. The funds though are not a gift, but will be adjusted against sale of...

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