Kolkata: IFB Agro has declared this month that it has paid Rs 40 crore to political parties through electoral bonds in the first nine months of the financial year 2023-2024. This is an amount that is three times its after-tax profits of Rs 13.87 crore for the same period.
The company has a sizeable presence in Indian-made-foreign-liquor or IMFL production and seafood processing in the state. Incidentally, seafood processing or prawn farming areas are at the heart of a massive political and social storm in Sandeshkhali, where the ruling TMC is battling serious allegations over forced capture of arable land for prawn farming and sexual exploitation of women.
There were reports in 2022 that the company approved the payment of Rs 40 crores in electoral bonds for the financial year 2022-2023. For the period, the company ended up paying Rs 18.30 crores in electoral bonds. Then, from April-Dec 2023 they paid Rs 40 crore.
Information released on the company’s website and in its stock exchange filings show that in the first two quarters of FY 2023-24, the company purchased electoral bonds amounting to Rs 15 crore each, while in the third quarter, it was Rs 10 crore. This is more than three times the Rs 13 crore that the company says it donated in the first nine months of FY 2022-23.
Electoral bonds – legal, until the Supreme Court pronounced them “unconstitutional” on February 15, 2024 – allowed companies and individuals to give money to political parties anonymously through the State Bank of India.
IFB is the first company that has declared electoral bonds in its filings. It has not named any political party, but referred to its conversations with the TMC government of West Bengal.
In the company’s ‘Notes’ dated Feb 13, 2024, of the statement of unaudited standalone financial results for the three month-quarter and the nine months ending in December 2023, the “reasons stated” for spending Rs 40 crore in the first nine months of the FY 2023-24, ending in December 2023.
The Directors’ Report for the FY 2022-23, available publicly on its website says:
“The business continues to face issues as reported earlier and in order to maintain the continuity of the business and to protect the interest of all the stakeholders, the Company paid [Rs] 18.30 Crs towards subscription of the Electoral Bonds during the year. The Company has further paid Rs 15 Crores towards subscription of Electoral Bonds in the Month of April 2023.”
The document goes on to declare that the company’s operational profit (EBITDA or earnings before interest, taxes, depreciation, and amortisation) declined to Rs 90.24 crores in 2022-23 (as against Rs 92.56 crores in 2021-22), a decrease of 2.5% as compared to the previous year.
‘As per our instructions from the government’
In a recording of IFB Agro’s annual general meeting of FY 2023, on July 31, 2023, a shareholder is heard mentioning electoral bond payments over its spirits business and asking a question, if the company can take its business out of West Bengal, to another state.
Joint Executive Chairman Bikramjit Nag responds saying that the company’s main project is now the fish feed set-up in Odisha’s Balasore, close to Bengal, and that it is trying to explore options in other states. Nag then says that the electoral bonds were paid “as per our instructions from the government.”
“This is something that we as a company must say that we have not done before but are being made to do. And as a result of this we are investing outside the state. We have made this clear in our AGM in the past. That is why we have not invested in the feed plant in the state. We don’t plan to invest in any new project in the state. All opportunities we are looking at are outside the state,” Nag said.
“There’s nothing more to say on this. We’ve kept the stock exchanges informed. We have written to the chief minister a number of times but this is her decision and she will not give us any time and that’s where it stands,” he added.
It was on April 1, 2022, when the company first informed the NSE and BSE of its Board’s decision to purchase Rs 40 crore in electoral bonds to “political parties” in 2022-23 “for the best interest of the company.”
In its Annual Report for that year, the company noted its decision to set up its next fish feed manufacturing facility in Odisha due to issues faced in West Bengal, saying that the decision comes despite the fact that Bengal is “the major feed market for the Company.”
The profit after tax for the company in FY 2022-23 was Rs 47.21, Rs 7 crore more than its contribution towards electoral bonds. While this in itself does not indicate that the company is paying out of its means – it could be paying from its savings – it does indicate a situation where industries find it difficult to function without making significant contributions through this route, to political parties.
‘Armed goons’
In April 2022, veteran economic journalist and market analyst Sucheta Dalal had reported on Moneylife about what she saw as a curious chain of events.
In June 2020, IFB Agro had informed the National Stock Exchange about the temporary closure of its Noorpur distillery in West Bengal’s South 24 Parganas district following an attack by “150 armed goons.”
The company filed a police case and sought intervention from Chief Minister Mamata Banerjee.
The Noorpur distillery happens to be located in the Diamond Harbour Lok Sabha constituency, currently represented by Trinamool Congress general secretary and Mamata Banerjee’s nephew, Abhishek.
“These unidentified hooligans, armed with various types of weapons, forcibly entered the factory, beat up the security guards and practically held our employees/workers on duty as hostage,” says the disclosure then, signed by the Company Secretary.
“The Distillery was asked to shut down and our employees and workers were asked to vacate the factory at gunpoint by 12 noon,” the disclosure said.
The attack took place on June 25, 2020, according to IFB Agro. On June 26, 2020, GST officials appeared to have conducted a “search” at the same venue, according to this tweet by TMC Lok Sabha MP Kalyan Banerjee – who also said, citing a note written by GST’s intelligence unit to the local police station that the search was conducted on the basis of “specific intelligence” from the GST headquarters in New Delhi.
The raid was conducted at IFB Agro Industrial Limited office by the DG GST Intelligence Hqrs New Delhi on the basis of a warrant issued by the appropriate court. Why @jdhankhar1 you are interested to save the industrialist who indulge criminal activities. (1/2) pic.twitter.com/GejuWUXAse
— Kalyan Banerjee (@KBanerjee_AITC) June 29, 2020
Then Bengal Governor and now Vice-President of the country, Jagdeep Dhankhar, had sought an explanation from the state government in the aftermath. “Such kind of vandalism in broad daylight in the presence of police personnel is a reflection on the industry situation in the state. IFB is a listed company and has a national presence. If they are facing this harassment, then I must say, industrial security in the state is far worse than this,” he told ThePrint in July 2020.
In January 2021, the company’s Q3 results stated that its alcohol business in West Bengal has been “in suffering and is under threat” for not succumbing to the illegal demands of certain excise officials who allegedly singled them out.
In its Q3 result for the FY 2021-22, it was first disclosed that the company has purchased Rs 12 crore in electoral bonds, exceeding their Rs 8.99 crore profit for that period.
On October 7, 2021, IFB Agro disclosed that the board of directors had decided that it was in the best interests of the company and all its stakeholders to make a political contribution by way of subscription to electoral bonds to the tune of Rs 25 crore in 2021-2022. It contributed Rs 12 crore through electoral bonds in the October-December 2021 quarter alone.
Recently, The News Minute and Newslaundry published an investigation that revealed that 30 firms which were facing Enforcement Directorate and Income Tax department investigations had donated Rs 335 crore to the BJP.
“At least six of these firms, which were already donors to the party, handed out a heftier amount in the months following the searches,” the report found.
The Supreme Court has called for sources of all electoral bonds so far to be revealed and made public by the Election Commission by March 13, 2024.
(With inputs by Soumashree Sarkar)