The company has given a whopping amount of Rs 150.99 crore to other group companies without charging any interest. ``The company, has at the close of the year, interest-free loans and other recoverables aggregating Rs 51.34 crore due from its subsidiaries and is also without any stipulations as to repayment,'' Dalal & Shah, auditors, said in the balance sheet for the year 1997-98. Out of this, Rs 50.72 crore has been given to Raymond Calitri Denim Ltd alone.

The terms and conditions worked out with financial institutions in another loan to Raymond Synthetics (promoted by Raymond Ltd) are also interesting. ``In respect of loans aggregatingRs 99.65 crore due from Raymond Synthetics Ltd (RSL), the company has given an undertaking to a financial institution that the loans shall not be recovered during the currency of the institution's loans to RSL and the interest shall be charged by the company only for those years for which RSL has declared dividend on its capital,'' the auditors said.

Even though the parent company (Raymond Ltd) has paid interest and finance charges of Rs 101.74 crore (Rs 83.91 crore in the previous year) to banks and institutions for the year 1997-98 on various loans, it has generously extended over Rs 150 crore interest-free loan to its group companies. ``The era of free lunches is over. When a listed company extends interest-free loans, it is an additional burden especially if it has taken huge loans from institutions. You are subsidising the operations of other group companies. On the other hand, the financial position of the lender becomes vulnerable,'' said a corporate lawyer.

Clarifying the company's position, MinooR Shroff, executive vice chairman, Raymond Ltd, said ``the interest-free loans given to subsidiary Raymond Calitri has been given as promoters' commitment to lenders. Interest has not been charged in view of the stipulation that interest will not be charged by promoters till dividend is declared by the subsidiary.'' However, it may be noted that Raymond Calitri has made a loss of Rs 23.03 crore (last year's loss was Rs 9.29 crore) and is not in a position to declare any dividend in the near future.

In a written reply to queries from this paper, Shroff said ``in the case of Raymond Synthetics, the financial institutions had stipulated at the time of sanction of loans that interest will not be charged till the time RSL declares dividend.'' The loans were given as part of the promoters' contribution required for funding of its expansion project, he said, but didn't comment about the financial burden on the parent company.

Corporate circles also questioned the logic behind the decision of institutions askingthe company to extend interest-free loans to the subsidiaries. The subsidiary is already making losses. On top of this, institutions are also ensuring that the parent company also get into a financial trap.