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BIFR reserves orders on Recron Synthetics

Richa Mishra

NEW DELHI, Sept. 18

THE Board for Industrial and Financial Reconstruction (BIFR) has reserved its orders on declaring Recron Synthetics Ltd (RSL), formerly Raymond Synthetics Ltd, as a sick company.

It has directed all the involved banks and institutions to make their submission on the issues raised at the recent hearing, following which RSL will make its submission.

The Bench said that the hearing was held to consider the reference filed by RSL under Section 15(1) of SICA.

It also said that certain issues had cropped up during the course of hearing, which need to be considered before taking a decision on the company's sickness.

These issues relate to the justification for reduction in the period of financial year to nine months to close on December 31, 1999; the bonafides of the resolution passed at the board of directors meeting held on January 17, 2000, recording reasons for making a reference to BIFR; verification of the company's statement regarding increase in raw material prices without a corresponding increase in selling prices and reduction in the level of sundry debtors, and whether the proceeds were routed through ac counts and properly utilised for the operations of the company or to the detriment of the secured creditors.

Apart from these, the issues of whether any undue preference had been shown in the settlement of Rs 94.98 crore paid by the company to 11 creditors, whether the information relating to the companies in the group or house or associates as incorporated in Form `A' was correct and adequate and whether the company had come to BIFR in haste only to protect the company and its promoters' (immediate past or present) interest unduly will also be discussed.

At the hearing, the company said that the change of management had been done through advertisements as per SEBI guidelines.

It added that RSL was promoted by the Raymond group and since it could not fund the losses further, it started looking for a party capable of reviving RSL.

In September, 1999, Silvassa Yarn & Investment Ltd (SYIL) was identified by Raymond Ltd (RL) and it entered into an agreement for sale of its entire shareholding of face value of Rs 44.85 crore amounting to 36.15 per cent.

The new management had taken over on January 17, 2000, and the company had filed a reference to BIFR on January 21.

On review of Form `A' submitted by RSL, the Bench said that its paid-up capital was Rs 124.16 crore, with free nil reserves and accumulated losses of Rs 141.63 crore.

Investment in plant and machinery was to the tune of Rs 433.56 crore as on March 31, 1999.