The Industrial Development Bank of India (IDBI) has sought a two-week extension from the Board for Financial & Industrial Reconstruction (BIFR)for submitting a report on whether tyre company Dunlop India Ltd can be categorised as a sick company under the Sick Industrial Companies(Special Provisions) Act.
According to sources, the final report is expected to be submitted to the BIFR on May 15. On March 31, the BIFR on its first hearing of the Dunlop referral had given the financial institution a month's time to look into the matter and submit a report. The report was originally slated to be filed yesterday.
The IDBI is understood to have received views from the consortium banks relevant to the case only in the last week of April.
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The formal intimation to prepare the report from the BIFR also reached the IDBI a little late. It is therefor natural that the financial institution will take some time to compile all views before taking any final decision, said the source.
The IDBI is looking into two main points pertaining to Dunlop, which include:
Entries made in the company's balance sheets for 1995-96 relating to sale transactions with subsidiaries.
Provisioning made against loans and advances made to subsidiary companies.
The financial institution which is also serving as the operating agency of the company, will try to ascertain whether the figures mentioned present a true and fair picture on the company and whether these are genuine entries in accordance with the accounting practices laid down by the SICA.
The process of examining the legal and accounting factors is underway, said the source, who refrained from commenting on the final pronouncement by the financial institution, to be made two weeks later.
This is the first instance after a long time of a development financial institution being associated with any company of the Jumbo group.
As reported, the tyre major's annual report for 1995-96 reported an other income of Rs 169 crore from the sale of two properties to a subsidiary Dunlop Investments Ltd. Without this figure, it would have shown a loss of Rs 130 crore instead of the Rs 39 crore profits.
The company's managing director P J Rao had recently publicly said that he was confident that Dunlop will be accepted as a sick company by the BIFR .
He had also said that the company would easily turn around within an 18-month period from the day its working capital was increased from the current Rs 40 crore to around Rs 110 crore.