The Hindu Business Line : It's business as usual for BIFR despite uncertainty

DESPITE the continuing uncertainty over the fate of the Board for Industrial and Financial Reconstruction (BIFR), it's business as usual for the Board with 31 cases registered with it in July alone.

The Board has received 6,427 references, including those from public sector undertakings (PSUs) as on July 31, 2004. Out of these 6,427 references received, it has declined registration to 1,411 cases and registered 5,004. It has dismissed 1,345 cases as non-maintainable.

Further, rehabilitation schemes have been approved for 615 sick companies by the BIFR while the Appellate Authority and the Supreme Court have sanctioned 20 revival schemes. Of these 615 companies, 367 have been declared as no longer sick. The Board has recommended winding up for 1,276 companies.

Since its inception from May 1987 to December 2003, the Board has received 6,263 references. Out of these references, 4,748 cases were registered. The net worth and accumulated losses of these companies were close to Rs 54,650.91 crore and Rs 1,03,277.56 crore, respectively.

The industry-wise break-up reveals that the highest number of references received and registered were from the textiles sector (98, up from 75 in 2000), followed by metallurgical (78, up from 52 in 2000). Commenting on the causes for sickness reported by the companies at the time of registration, official sources said the reasons can be classified into managerial issues, troubles arising due to production and technical hiccups, financial problems and Government policies.

A random survey of the reasons for sickness, as spelt out by the companies, has revealed that there are some common factors, sources said.

One of the major factors cited was payment of high excise duties by the Indian companies while imports were available at cheaper rates due to drastic cut in customs duties.

Another factor was the inadequate supply of power. Delays in providing adequate and timely working capital facilities was pointed out as another major factor for companies approaching the BIFR.

According to sources in the Ministry of Company Affairs, the Government has taken steps to end the logjam on the proposed National Company Law Tribunal (NCLT), a body that is proposed to replace the Board. The Tribunal should be in place by the end of this year.

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