From News Dispaches JAIPUR: The sale of Aryavarata Plywood Ltd (APL) a sick unit at Bhiwadi to a firm owned by the wife and two sons of the Union Home Minister, Buta Singh, and the brother of the Vayudoot chairman, Harshwardan is marked by some Curious departures of norms by the Rajasthan State Industrial and Investment Corporation (RIICO), the Indian Express reported.

RIICO, together with the Intestinal Finance Corporation of India (IFCI) had invested in APL nearly Rs 27 lakh and the institution played a major role in the sale of the sick unit to Zorin Impex the firm owned by the family members of the Union Home Minister.

With the transaction now becoming “hot” RIICO officials are trying to pass the buck to the IFCI. They claim that IFCI was the lead institution so far as the loans to APL was concerned.

A senior RIICO official said that the transaction was approved by the IFCI board. The proposals for the same were however mooted from the RIICO office in Jaipur and the deal with Zorin Impex was in fact, finalized before IFCI’s approval.

An intriguing feature of the transaction is that while the initial correspondence of RIICO in connection with the sale of APL was with Zorin Impex and the deal was also finalised with the same concern in December last year, another deal was struck on January 17 this year, transfering all the assets of Zorin Impex to Zorawar vanaspati Ltd. An application for the same was submitted to RIICO by Zorin Impex only five days earlier. The vanaspti unit is also owned by the family members of Buta Singh.

The new agreement between. RICO and Zorawar Vanaspati Ltd also allowed the vegetable oils unit to use 25,000 sq meters of the 66,000 sq metres which came into the possession of Zorin Impex along with the other assets of APL. The land was to be used for the construction of the vanaspati unit. No heed was paid to another Clause of the agreement which stipulated that production work in the plywood unit should commence within a period of three months. This has since lapsed.

If the market value of land (Rs 250 per sq metre) is taken into consideration it would mean that the vanaspati unit secured land worth Rs 62.50 lakh for a down payment of only Rs 22,50 lakh by Zorin Impex to RICO (Aryavarata Plywood Ltd was sold for Rs 90 lakh and the balance of Rs 67.50 lakh has to be paid over a period of six years.) Though the value of land as per RIICO estimates is only Rs 80 per sq metre, its market price is more than four times as the land is totally “developed”.

Article extracted from this publication >>  May 12, 1989