Though seemingly a gesture of goodwill by the group, the debenture holders however stand to lose heavily since the price being offered by Torrent for the fully paid debentures is Rs 35 per debenture, which is Rs 20 less than the face value of Rs 55 per instrument. In a letter written to the debenture holders of Torrent Gujarat Biotech Ltd (TGBL), a copy of which is available with The Financial Express, group chairman Sudhir Mehta and vice-chairman Samir Mehta have emphasised that "this invitation, though not obligatory, is being made by Torrent Holdings Pvt Ltd as a gesture of goodwill towards the debenture holders and we dosincerely hope that you will consider the same in the spirit in which it is being made."

Furthermore, the Mehtas clearly state that the "debenture holder is under no compulsion or obligation to sell his fully paid debentures to Torrent under this invitation and we would advocate that you consider this matter with due care and diligence."

It may be recalled that TGBL had defaulted in redemption of the first instalment of the Rs 70 crore NCD issue and in the payment of the half yearly interest due on March 31 this year. Following this Torrent had decided to refer the company to BIFR and it had also been declared sick by the Government of Gujarat. In a letter to debenture holders in May, Torrent chairman Sudhir Mehta had admitted that "owing to the grim situation concerning the Penicillin G business.....the company, during the financial year 1998-99 has incurred a net loss of Rs 44.45 crore and its accumulated losses at the end of March 31, 1999 have increased to Rs 108.84 crore." He went on to add that thishad "resulted in a severe resource crunch and the company has not been able to redeem the first instalment of NCDs due for payment on February 24, 1999 and also the payment of interest for the half year ended March 31." Interestingly, at that time Mehta had assured investors that "as provided under the Sick Industrial Companies Act, we are preparing a scheme of revival taking into account present and anticipated market conditions."

Following this, the group managed to offload its entire equity in its power company, Gujarat Torrent Energy Corporation in favour of the British power major PowerGen in one of the largest corporate deals in the country amounting to Rs 1,100 crore. At the time of seeking the Gujarat government's approval for the deal, Torrent had assured the state government that it would try and revive its sick group companies including TGBL, Gujarat Leasing and Finance and Gujarat Torrent Cables. What is perplexing investors here is the fact that instead of ploughing back the resources generatedby the GTEC deal into the group companies, Torrent has instead done nothing about their revamp -- a fact which is evident from the BIFR's declaration of TGBL as a sick company.