CLB gives Morepen few more days: dues

The Company Law Board (CLB) today gave Morepen Laboratories a final reprieve of a few more days to reply on the status of repayment of overdue fixed deposits.

The CLB has asked the company to file its reply this month itself as the final hearing of the case is slated later his month.

CLB in its order today noted that the company has not filed its reply inspite of specific directions to submit the details by March 15.

'Our case of asking the CLB to appoint six government directors on the company's board to protect the interest of the depositors has become stronger as the company is not even complying with the directions of the board,' a government official said adding that if the company is put under liquidation then the unsecured creditors may not recover their dues.

Speaking to Business Standard on how the company planned to repay the fixed deposits and what were the future plans, Sushil Suri, Chairman and managing director of the company, who is currently in the US said, 'We are actively looking to get some investors into the company to get the business going as the GDR issue is locked up with the Debt Recovery Tribunal (DRT). The appointment of government directors itself will not result in depositors getting their money back as there are no funds available. We have suggested alternative schemes including issue of shares and payment of money to really small depositors but those have not been considered at CLB as the matter is also stuck at the Shimla High Court.'

Morepen had raised $15.25 million in GDR in 2003 which are locked up in a case at Debt Recovery Tribunal.

Speaking on the liability towards secured creditors, Suri said,'The financial institutions are in agreement on the re-structured payment scheme except for Lord Krishna Bank which has a minor exposure. We have approached the RBI on the issue.

'Any company can have a business failure. Our strategy to bet on one drug did not come through otherwise we would have been sitting on $50-$100 million. Without an investor coming in or the GDR proceeds becoming available not much can happen,' Suri said.

The company had earlier defaulted in repayment of its fixed deposits to the tune of Rs 156.2 crore. A repayment scheme was subsequently approved according to which deposits up to Rs 5,000 were to be repaid within one year and for others over 4 years.

The government has in its reference under the Companies Act alleged mismanagement on the part of the company based on the scrutiny of accounts as on 30 September 2003.

According to the government official, as per CLB's earlier order the company was required to pay Rs 14.28 crore in the period starting 19 August 2003 up to 31 January 2004 but paid only Rs 5.55 crore.

Acting on government's reference, CLB had asked the company to furnish progress report on the repayment of fixed deposits to public and reply as to why government directors should not be appointed.

The government's argument is that the company spent the money without proper planning which contributed to default in fixed deposits.