Scooters India shares fetch more than paid-up value after dismissal of chairman

Krishanan: An abrupt dismissalLast fortnight, 6,800 private shareholders of Scooters India Limited (SIL), a tottering public sector unit based in Lucknow, were pleasantly surprised. For the first time in SIL's seven-year history its shares were fetching more (Rs 10.50) than the paid-up value of Rs 10 per share. The buoyancy in the share prices came close on the heels of the dismissal of V. Krishanan, 58, the dapper chairman of the company.Krishanan's 21 months controversial tenure as chairman came to an abrupt end when he was asked to proceed on leave on March 9 by the Union Minister of State for Industry, Charanjit Chanana, following numerous complaints of financial and administrative irregularities. Krishanan had also been held responsible for encouraging groupism amongst SIL's senior officials, patronising private entrepreneurs at the cost of the company, the large-scale pilferage of stores and his inability to steer SIL out of the woods.Krishanan was eased out only after the Industry Ministry had carefully begun investigating over 30 complaints of irregularities in SIL. Among them: Prices of forgings worth Rs 24.48 lakh bought from a Kanpur-based company were jacked up retrospectively without the approval of the board of directors or the purchase committee. The orders were placed in February 1979. while the rates were revised in January 1981 and the suppliers were paid extra money for the entire supply.The rate of a set of press components supplied by a Bombay-based company was increased from Rs 205 to Rs 239 per set and SIL buys over 40,000 sets annually. The Board's approval, required by the company's rules, was never sought for enhancing the rates. SIL entered into an agreement with an Indian agent of a West German firm for the supply of imported steel at Rs 10,000 per tonne as against Rs 8,000 quoted by other private parties.A carburettor manufacturing firm of Pune was paid Rs 71.90 per piece against an agreed price of Rs 62.50. The total amount involved is Rs 8.75 lakh.Two lathe machines worth Rs 1.50 lakh were bought by the company from another public sector unit at book value. But these machines were given to a private ancillary-unit on easy instalments against the norms of the company.A truck load of spare parts worth over Rs 2 lakh shown to have been purchased never arrived. When this was pointed out to the chairman, he reportedly told the investigating officer that he had personally seen the truck being off-loaded in the company's premises and ordered the closure of the investigation.Rejected components worth over Rs 10 lakh have been bought during the last two years. When M.S. Alexander, a former assistant vigilance officer, lodged a complaint, he was transferred to Delhi.Over half-a-dozen agencies for selling scooters were allotted to people who wielded political clout in Uttar Pradesh and elsewhere.Faced with charges of this nature, little wonder that SIL has come in for sharp criticism. Says a senior official of the Industry Ministry. "There is not even a single department of SIL which is clean. It stinks." Agrees Swapan Kumar Dass, president of the 2,000-strong Scooters India Karmachari Sangh: "There has been rampant corruption here."In fact, SIL seems to have gone out of its way to patronise politicians. During the Janata regime, a pro-Janata activist was given a scooter distribution outlet in Uttar Pradesh because he had criticised the malfunctioning of the company. After the Congress (I)'s return to power, three dealerships were given in Uttar Pradesh to the nominees or relatives of two All India Congress Committee-I (AICC-I) general secretaries and a former chief of the Uttar Pradesh Congress Committee (I) (UPCC-I). Of SIL's 200 dealers, over 40 were appointed last year and most of them are persons connected with the ruling party.Losses: SIL's management has also been accused of being lenient in dealing with corrupt employees of the company. Despite repeated complaints that the consumption of various items like plugs, tyres, tubes, speedometers, wires, cables, bulbs and other items far exceeded the amount actually required for the production of scooters, no probe was ordered.Ironically, SIL is perhaps the only manufacturing unit in the country whose losses surge when the production increases. It loses Rs 1,500 for every additional scooter it turns out from the factory. And the total losses during 1980-81 were a staggering Rs 4.80 crore for 49,000 scooter power packs as against Rs 4.19 crore for 47,000 scooters a year before. With only 40 per cent plant utilisation, SIL could not achieve its target of 65,000 scooters for the year 1980-81. In fact, when Krishanan last month met the prime minister to plead his case, Mrs Gandhi's sole question to him was to ask why he hadn't been able to bring down losses.Predictably, Krishanan's removal from SIL has been welcomed by its employees. Says Brigadier Ghai, the newly appointed executive director: "Everyone here has welcomed the change in the leadership. Since there was a weak administration, he could not manage the unit effectively."Denials: Krishanan's supporters at SIL, though there are only a handful, deny that he is responsible for the mess. Says one of them: "It is a part of the conspiracy hatched by a few persons to oust Krishanan because he was opposing their nefarious designs to promote some unscrupulous elements. Krishanan is not involved in any financial bungling."Predictably, some leading functionaries of the ruling party have also taken up cudgels on behalf of Krishanan. Last fortnight. three general secretaries of the AICC(I) and over a dozen Congress (I) MLAs from Uttar Pradesh sent representations to the prime minister and the industry minister lauding Krishanan's performance as chairman of the SIL. One AICC(I) general secretary reportedly went to the extent of accusing the Punjabi and Kayastha group of conspiring against the south Indian Brahmin chairman.Although these efforts could not ensure Krishanan's continuation as SIL's chairman, he was appointed managing director of Bharat Pumps and Compressors Limited, another public sector unit, in Allahabad. Obviously bungling in one public sector unit is no disqualification for running another.Published By: AtMigration Published On: Feb 25, 2014 15:54 IST--- ENDS ---

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Scooters India shares fetch more than paid-up value after dismissal of chairman

Last fortnight, 6,800 private shareholders of Scooters India Limited, a tottering public sector unit based in Lucknow, were pleasantly surprised. For the first time in SIL's seven-year history its shares were fetching more (Rs 10.50) than the paid-up value of Rs 10 per share.

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