The Hindu Business Line : Inalsa told to explain reference under SICA

THE Board for Industrial and Financial Reconstruction (BIFR) has sought an explanation from Inalsa Appliances Ltd as to why its reference should not be rejected. Musing over the matter, the BIFR Bench noted that the company had filed a reference under the Sick Industrial Companies (Special Provisions) Act (SICA), 1985, in September 2003.

On January 23, 2004, the Board received a letter from Delhi-based Alfa Agencies, an unsecured creditor, raising objections to the `Form A' submitted by the company before BIFR. According to the unsecured creditors, the company did not have any factory premises, industrial workers and plant machinery. Besides, the company has transformed itself from a manufacturing company into a marketing company, thereby it is no longer an industrial company under SICA, they submitted.

Further, the reference filed by the company on September 25, 2003, and received by the Board on September 29, 2003, was time barred.

The unabsorbed loss as per the audited balance sheet of the company as on March 31, 2002, was Rs 21.09 crore as against the paid-up capital of Rs 13.84 crore.

Therefore, the company was sick in the financial year ending March 31, 2002, itself, but it filed the reference under Section 15(1) of SICA beyond the stipulated period of 60 days from the date of finalisation of the duly audited accounts for the period ending March 31, 2002.

The company has preferred to file its reference based on its audited balance sheet ending March 31, 2003, the Bench noted.

The BIFR Bench also observed that in its reply dated December 10, 2003, filed before the Civil Judge, Tiz Hazari, the company has clearly stated that it has closed down its manufacturing operations and transformed itself into a marketing company only.

Further, it was now outsourcing manufacturing activities. Hence, it was clear that the company did not own an `industrial undertaking.'