NEW DELHI, July 10: The Reserve Bank of India's order banning Asia Pacific Investment Trust from accepting deposits (either through fresh FDs or renewals) has put a spoke in the wheel of the revival package being worked out by the company. The Hyderabad-based NBFC, which has been facing a run on its deposits since 1996-end, recently decided on a revival package, comprising part repayment and renewal of the matured FDs. As the fate of the rollover now hangs in balance, it seems doubtful whether the company will be able to stick to its repayment schedule.This is sure to irk depositors who have been waiting for months to get back their money. In fact, in May-end, some Delhi-based depositors even filed complaints against the company in the R K Puram police station for its failure to honour payment commitments.

Asia Pacific's top-brass may now have to rethink its strategy to pay back depositors. Although relying on rollovers is not the ideal way to repay old debts, the blanket ban could spell disaster for the depositors if the recovery of funds from clients fails to pick up.Market sources say the company is looking at infusion of funds of around Rs 5-10 crore by a Calcutta-based industrialist through an equity stake. Although the company has in the past denied rumours of a takeover, they admitted that some top level changes have taken place with O P Mody taking over as the new managing director.Since November last year, Asia Pacific has been deferring payment of principal and interest on fixed deposits. The company's woes began when a substantial amount of money lent in the ICD market proved to be bad debts.

Company officials claim they had lent to corporate bluechips and, hence, are hopeful of recovering these loans. But, considering the rate of 29 per cent at which the company says it lent to corporates, one wonders at the clientle.Interestingly, CRB Capital Markets figured prominently in Asia Pacific's client list with an exposure of Rs 4 crore. According to the Crisil report, a liberal accounting policies and high level of NPAs in Asia Pacific's portfolio have led to considerable erosion of the company's networth.The company, which earlier belonged to the Nagarjuna group, was taken over by Delhi-based industrialist, R S Chowdhury, a few yeas ago. The chairman of the company is Field Marshal Sam Manekshaw. During 1995-96, Asia Pacific had a fixed deposit base of Rs 61 crore, which later fell to Rs 40 crore as fresh inflows stopped. However, officials claim the deposit liability is only around Rs 12 crore. Market sources say the company lured depositors with incentives as high as 6-7 per cent on its FDs.Earlier this year, Crisil had downgraded Asia Pacific's FD programme from FA- (indicating adequate safety with relatively lower standing) to FB (inadequate safety).

The rating was placed under watch pending the company's rights issue, initially slated for April 1996. The company is yet to augment its equity base through the rights and it appears that the issue could be further delayed.The company has revamped its top management and has brought in a new team of experienced professionals. While the management has chalked out a programme to restructure the company's business and systems, it will take some time before the management's efforts result in the improvement of credit quality.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.