CALCUTTA, July 20: The Tea Board has formed a sub-committee to look into the viability of writing off loans worth nearly Rs 10 crore. The loans were given as part of overseas promotional expenses and to the ailing Tea Trading Corporation of India from the cess budget.

According to sources, the export promotion council of the board has decided to endorse the view of the sub-committee to write off these loans as irrecoverable.

In its report, the sub-committee pointed out that Hotel Corporation of India (HCI) should be made accountable for losses incurred by Indian Tea and Restaurants Ltd (ITRL) as it was managing ITRL under an operating contract.

Moreover, HCI should investigate the matter to find out who was responsible for the losses. ITRL is a joint venture between Tea Board and HCI.

The sub-committee felt that the amount which would be written off by Tea Board as irrecoverable loan should not exceed 51 per cent of the total loss in terms of proportionate share holding in the joint venture. However, some representatives of the export promotion council said it would not be proper to arrive at any conclusion on the matter as it was being discussed in the Parliament.

The issue has drawn the attention of the Public Accounts Committee (PAC) after tea corporates raised questions on promotional expenses which are part of the cess budget. The PAC asked Tea Board to furnish details of loans given as overseas promotional expenses and explain why it wanted to write off these loans.

The issue sparked off a controversy in connection with loans given to ITRL for overseas promotion of Indian tea. ITRL carried out its foreign promotional activities through Mayur Restaurant which operates from London and Sydney. According to sources, Mayur Restaurant failed to pay 70 per cent proportionate rent to Tea Board. ITRL virtually became bankrupt as it was burdened with negative cash flow and Tea Board had to write off all pending loans to declare it a" nil due company."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.