Fairval

Notes on Indian equities, sectors and economy

3i Infotech in debt trouble – where’s the corporate governance

Posted by fairval on December 14, 2011

3i Infotech is in serious debt trouble, reports The Economic Times today.

Lenders, investors shun debt-laden 3i Infotech; prospect of distress sale looms

I had written earlier how 3i was a great example of a sleeping board (3i Infotech – An example of lax corporate governance) . Here, the chairman, CEO and CEO has unchanged for 8-10 years. It is clear they have practiced cowboy capitalism, and use public and borrowed funds, and run them to the ground. The destruction of other people’s money is simply amazing.

Yet, we have no change in leadership. How come these people havent been fired yet? Now, it appears the company is defaulting.

The ET story says: “The company has been facing a temporary cash flow issue as refinance is not happening on time for shorter maturity loans,” says V Srinivasan, managing director & global CEO of 3i.

3i Info was floated by ICICI Bank, and it no wonder it is still lending to 3i. The CEO is quoted saying “We have borrowedRs200 crore in long-term loans from ICICI Bank in October. Also, ICICI Bank is working on loan syndication for a long-term loan of Rs 300 crore. We are capable for paying the salaries through operations,” he adds

ICICI Bank is still the largest shareholder in 3i. Wonder if it is violating some RBI guidelines, or even corporate governance ethics, by continuing to support 3i at a time when no one wants to touch it. What’s it about ICICI, and corporate governance? The other company floated by it, First Source is in a similar mess.

 

 

 

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One Response to “3i Infotech in debt trouble – where’s the corporate governance”

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