For the 18-month period ended March 31, SM Dyechem reported a loss of Rs 61.91 crore against a meagre profit of Rs 11 lakh in the corresponding period of the previous year.
The company has claimed that its request for certain reliefs and concessions has been approved in principle by the lead institution, Industrial Development Bank of India (IDBI), for a one-time settlement with waiver of interest amounting to Rs 154.36 crore, subject to certain compliance's, consents and approvals by all other institutions and banks.
The provision for interest of Rs 169.90 crore as of March 31 (inclusive of Rs. 4.72 crore already paid and put up as current assets) has not yet been made. Had the provision for interest been made, the loss for the year ended March 31 would have been higher.
If the concealed losses had been taken into account, then, the total loss suffered by the company would have been a whopping Rs 140.15 crore for the 18-month period. Reserves of the company too, would have dipped by Rs 134.93 crore.
SM Dyechem has also shown lower depreciation in order to play down the losses. It has provided depreciation on its ethylene oxide (EO) plant on the basis of the number of days it has actually operated. Had the depreciation been provided according to the Companies Act, the provision would have been higher by Rs 14.57 crore.
This is the first time that the company's glycol's division has reported losses. The company's EO and the mono ethylene glycol (MEG) manufacturing facility at Kurkumbh has been riddled by controversy since inception.
Within a few days of opening, it was forced to close as locals protested against the effluents being released into the fields by the company. SM Dyechem was forced to set up a complete effluent treatment plant.
The final blow came when the Rao government decided to decontrol molasses, which resulted in the shooting up of alcohol prices.