As you are aware, your Company was declared as a sick unit under the provisions of Sick
Industrial Companies (Special Provisions) Act, 1985 by the Board for Industrial Finance
and Reconstruction (BIFR) on 31st March 2000. BIFR had appointed Industrial Development
Bank of India (IDBI) as the operating agency to look into the revival of the Company. BIFR
has recommended winding up of the Company vide its letter no 383/99/BI dated 19th June
2003. The said BIFR recommendation to Bombay High Court to wind up your company has been
assigned number as Company Petition No. 758 of 2004 (in BIFR case 382 of 1999).The matter
will now come up for hearing in the usual course for appointment of official liquidator.
The Directors of your Company, once again take this opportunity to explain the various
steps taken for revival of your company:
Your Company was successful in securing an international arbitration award in
its favour at the London Court of International Arbitration (LCIA). The LCIA award has
completely extinguished the balance payment of SFr 5.871 Million payable under the second
tranch and also directed the collaborators to pay damages of SFR 3,158,200 and interest
thereon till the date they make such payment. Additionally legal fees of sterling pound
225,000 were also awarded. However, till date the damages etc., as awarded, could not be
recovered from the collaborators as they have reported bankruptcy under the Swiss Laws.
During the year under review CEGATE has dismissed our appeal filed against the
Commissioner's order no. 04A/PS-34/2002/M-lll dated 27th March, 2002 adjudicating duty
amount payable of Rs.197,096,699 (amount of interest not ascertainable) the amount of
differential duty, interest and penalties payable amounting to Rs.464,054,965 (amount of
interest not ascertainable). We are exploring various options to make representation to
the higher Government authorities in the matter.
The entire dues of ICICI were settled amicably through a One-Time Settlement
Canara Bank had accepted the Company's OTS proposal and according to the terms
and conditions of the said consent terms Rs.52,00,000 Lakhs has already been paid to
Canara Bank till date. However, for non-payment of further amounts under the OTS proposal,
the same has been withdrawn by the Canra Bank.
Subsequent to the closure of the plant operations at Tarapur in the month of
April 2000, all the workers and the employees have been paid their final dues as per law.
Your Company has made several unsuccessful efforts to settle IDBI dues. The
likelihood of reviving your company has hinged upon IDBI accepting a settlement proposal.
We are quoting extracts from the proceedings of BIFR hearing held on 18th of September
2002, which endorses the efforts committed by the Directors of your Company to ensure
"The bench noted that the Company had failed because of the technical reasons. The
Plant and Machinery which was imported was defective. The Promoters did their best to
obtain relief and went for arbitration. However, before they could execute the award
issued in their favor, the other party (the collaborator) went into liquidation. It was
required that the Banks and FIs take a hard look at the options available and take a
pragmatic view. The Plant supplied is technically defective. The recovery prospects would
be negligible if the Company went into liquidation. OTS at 87% of the distress sale value
of the assets on which Government agencies such as Income Tax and others a/so
have a claim cannot be considered as totally unreasonable, especially when the borrower
was not a willful defaulter."
Subsequent to the declaration of the Company as a Sick unit, the promoters
continue to infuse funds from their personal resources, for holding on operations,
securing your Company's assets and for making financial settlements.
In view of the foregoing paragraphs, the management feels that on the grant of the
expected relief and concessions from financial institutions and the government, the
activities may be revived.
Statement in the Management's Discussion and Analysis Report detailing the company's
objectives, projections, estimates, expectations or predictions may be forward looking
statements within the meaning of applicable securities laws and regulations. These
statements being based on certain assumptions and expectation of future events, actual
results can differ materially from those expressed or implied. Important factors that
could make a difference to the company's operations include economic conditions affecting
global and domestic demand-supply conditions, finished goods prices, changes in Government
regulations and tax regime etc. The Company assumes no responsibility in respect of for
ward-looking statements, which may be revised or modified in future on the basis of
subsequent developments, information or events.