LML finally in BIFR lap, vendors alarmed

LML ancillaries and vendors are on a war path. They have finally taken up the battle against LML Ltd because the latter has gone to the BIFR to get registered as a sick company. If that happens, their payments will be frozen, driving many of them to bankruptcy.

In a press conference organised by the Indian Industries Association, a body which has taken up the battle on behalf of about 200 suppliers, 70 of them from Kanpur alone, the organisation's President Tarun Khetrapal said: "We have been kept in the dark by the company. For the past six months, LML has been assuring vendors that the company will start production soon and negotiations with other parties are at a fairly advanced stage. However, they turned out to be incorrect now that the company has gone to the BIFR."

The vendors, about 50 of them who were in the conference, told reporters the management had been selling parts, components, machines and other goods since it imposed the lockout on March 7.

The gravity of the situation is many units are facing closure. This will render about 50,000 workers unemployed.

IIA Vice-President RK Agarwal said NSIC and Sidbi ensured payment to SSIs from a large company. In this system the guarantor is the large company, but the underwriter is the SSI. Now most vendors will not be able to pay.

The vendors have gone to the UP facilitation council, which will summon the company and its judgements have to be implemented. Twelve cases have already been registered.

Vendors have sought the following from the government/banks:exemption from trade tax for three years, and without charging any interest, it should be taken back at the end of the period; one year deferment in the payment of electricity bill and same treatment for other taxes; Moreover, if and when BIFR readies a package for the company, it should carry a provision for payment to vendors for their past dues.

Also, banks should not launch prosecution against these companies for at least one year for non-payment. Similarly interest accruing for this year from the past loans should be waived, repayment of instalment of term loans should be deferred, etc for one year without any extra interest payment or imposition of any other levy.