Look what a co does with your money

Look what a co does with your money
SUNIL JAIN & RISHI

NEW DELHI, JANUARY 17: September 14, 1993: Asian Consolidated, formerly Asian Can, issues rights-cum-public issue of Rs 115 crore at a Rs 22 premium, for setting up a project to make 500 million aluminium beverage cans per year for beer and soft drinks at Alwar in Rajasthan.

December, 1999: The company is being wound up, after 6 years of not producing anything.

It's the quintessential can of worms. Seven years after the high-profile group first came out with a public-cum-rights issue of Rs 115 crore in September 1993, Asian Consolidated's director Sanjay Jain, told The Indian Express, the company was `in liquidation'. And no, the project was never set up says Jain. Jain today runs group company Rajasthan Breweries, which also appears down in the dumps. Interestingly, Jain's brother Rajiv, a director on Asian Consolidated, has no memory of events, preferring to stonewall at least a dozen attempts by The Indian Express, including a visit to his Gulmohar Park residence, to getdetails.

What happened to the money? No one really knows, but Jain says they never really got all the money anyway. He says 90 per cent of the issue was subscribed to (it was actually 100 per cent according to the Prime Database of share issues), but since the company's share price crashed, investors didn't pay up the allotment and call money. Jain doesn't remember the details, but says the company got around 30-35 per cent of the funds, and around 40 per cent of which was that of the promoters themselves. He can't provide proof of this since all papers are with the liquidator, but still, that's around Rs 25 crore of public money. What happened to it? Pre-operative expenses, land and building, issue costs and so on, says Jain.

Asian Consolidated's story, linked closely with the fortunes of other group companies, actually began with the Jain brothers first setting up a factory to make cans for Bournvita and other food products towards the end of the '80s. This was accomplished, and the factory set up onthe Delhi-Jaipur highway with a small public issue of under Rs 2 crore. This was followed by a separate license (and public issue) for the tops of the cans (Asian Closures) and TransAsia Packaging for printing on the cans. All were in the same complex, but had different licenses thanks to blinkered government policy.

In September 1991, they went in for a public issue of Rs 9.96 crore to set up a 75,000 hectalitre (or 25 million cans) state-of-the-art Rajasthan Brewery in Alwar, in Rajasthan -- this was later to be expanded to 2 lakh hectalitres. Then, in September 1993, came the synergistic aluminium cans project.

That's when the problems began. The merchant bankers cautioned investors that while the group said its turnover was Rs 80 lakh in an earlier prospectus in February 1990, this was false. The company contested this in the prospectus, saying that their sales were this amount, including the unaudited results.

Nor had the company implemented the Rajasthan Breweries project and that of TransAsiaPackaging for which it had collected Rs 22.87 crore. The company rebutted that this delay had taken place because the beer capacity was being increased seven times, to 5.5 lakh hectalitres of beer and 190 million cans for its Pepsi franchise.

Incidentally, when contacted, Sanjay Jain the CMD of Rajasthan breweries said that the current capacity of his brewery was 2 lakh hectalitres, and 109 million cans of soft drinks. He adds that he can reach 5 lakh hectalitres with a few crore of balancing equipment, but clearly the company failed to keep its promise.

Anyway, Pepsi didn't tie up with Asian Consolidated -- Jain said they had everything ready, though Pepsi sources said that they had never ever given any commitment to Jain, other than saying that if the quality was good then Pepsi would examine the matter. Asian then tied up with Cadbury Schweppes, though this utilised just a fraction of its capacity, while using imported can. This is in limbo again, now that Coke has bought over Cadbury Schweppes.Rajasthan Brewery then tied up with Carlsberg. This fell through for some reason, and the Jains got Stroh in 1993, the only foreign beer brand in the country. This has now ended and Rajasthan Brewery now bottles beer for Kingfisher and other brands.

Asian Consolidated is not traded today, and Rajasthan Breweries which crossed Rs 70 in 1994, is today quoted below par. The Asian Consolidated issue was lead managed by IFCI, PNB Capital Services and Mefcom Capital in New Delhi. When contacted, the office of K.V.S. Mani, Company Secretary of PNB Caps said it would be difficult to give any information on it since the organisation had recently shifted its office premises and it would be difficult to locate files. T.R. Khare, who heads the merchant banking division of Mefcom said they do not have information on the company since after the issue they stopped keeping track of the company. And since the company had closed down its merchant banking division three years ago because of bad market conditions, there wasn'tany file information either.

Track Your Money
During the stock market boom of the '90s, promoters raised money for just about anything. These investments either turned sick, or promoters simply vanished into thin air. Between April 1992 and March 1996, for instance, a total of 3,911 companies floated equity and raised over Rs 25,000 crore.

In January 1997, according to a study done by Prime Database, 84 per cent of these issues were either not listed or traded. A year later, Prime studied the top 100 issues of this period and found 81 of these were worth less than 50 per cent the issue price and 33 less than 10 per cent. The Indian Express tracks some of these high-profile groups, and projects, to find out where your money disappeared.