MPSIDC’s bond plans go awry

The Madhya Pradesh State Industrial Development Corp (MPSIDC) has admitted its plan of giving rich dividends on bond deposits has gone awry....

The Madhya Pradesh State Industrial Development Corp (MPSIDC) has admitted its plan of giving rich dividends on bond deposits has gone awry.

The state government has ordered an inquiry — being handled by the Economic Offences Wing — on how the MPSIDC’s re-investment plan has all but collapsed, putting huge PF funds of their bond holders in jeopardy.

It was in 1999 that the MPSIDC mopped up Rs 84 crore by way of bond deposits, attracting a 14 per cent interest. However, last fortnight, the MPSIDC sent out letters to each of its 174 bond depositors, informing them that it was going through a ‘‘severe financial crisis’’ and that to get their money redeemed, ‘‘depending on the availability of funds’’, the bond holders would now have to forgo the interest payable to them.

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Besides firms like Air India and Siemens, several charitable organisations like SOS Children’s Village as well as PSU and cooperative banks are among the bond holders who received the April 20 ultimatum from the MPSIDC. Only those bondholders willing to forgo interest would be paid the face value of the bonds ‘‘as early as possible, depending upon the availability of funds.’’

The letter by the MPSIDC Managing Director Raghav Chandra goes on to state, ‘‘We are well aware that you are being compelled to sacrifice a substantial portion of your earnings, but unfortunately, the circumstances are beyond our control… being a government organization (the MPSIDC) is sensitive to and realizes the severe hardship caused to the bondholders, particularly those representing the Trust funds of employees.’’

The MPSIDC has explained that the funds collected from the companies and banks were routed in inter-corporate deposits (ICDs) and that more than Rs 700 crore of its money was ‘‘stuck’’ in these deposits. Several borrowers were absconding and many companies had become sick and are now facing criminal action from the MPSIDC.

Ritu Sarin

Ritu Sarin is Executive Editor (News and Investigations) at The Indian Express group. Her areas of specialisation include internal security, money laundering and corruption. Sarin is one of India’s most renowned reporters and has a career in journalism of over four decades. She is a member of the International Consortium of Investigative Journalists (ICIJ) since 1999 and since early 2023, a member of its Board of Directors. She has also been a founder member of the ICIJ Network Committee (INC). She has, to begin with, alone, and later led teams which have worked on ICIJ’s Offshore Leaks, Swiss Leaks, the Pulitzer Prize winning Panama Papers, Paradise Papers, Implant Files, Fincen Files, Pandora Papers, the Uber Files and Deforestation Inc. She has conducted investigative journalism workshops and addressed investigative journalism conferences with a specialisation on collaborative journalism in several countries. ... Read More