Ministry seeks Baron books for 2002-03

The Union finance ministry has asked the Kabir Mulchandani-promoted Baron International Ltd to produce the audited balance sheet of 2002-03 and other documents related to Baron TCL Ltd, the company's joint venture with TCL Electronics of China, in support of its claim that the joint venture agreement is still in force.

Also, following claims by TCL executives that the venture is not operational any more and that Baron itself faces liquidation, the Foreign Investment Promotion Board (FIPB) wing of the finance ministry has asked Baron to provide its comments on the liquidation order passed by the Mumbai High Court on March 7, 2003, on a petition filed by LG Hotline CPT Ltd, a television picture tube supplier.

The FIPB secretariat also asked the company to meet ministry officials on September 25. But government sources said Baron International chairman Shakun Mulchandani, or any other executive, did not turn up for the meeting, and sought more time to organise the requisite documents.

The finance ministry's initiative assumes significance since it is a pointer to the fact that the government is not willing to allow local firms to use the provisions of the press note 18 (which requires a foreign company proposing to set up a new company to first seek a no-objection from an existing or past partner) to be used against a foreign company without reasons.

Baron has already said it will not grant a no objection certificate to TCL to set up a wholly owned subsidiary since the venture has not been terminated as yet.

On its part, TCL has alleged that the joint venture is not functional for over 18 months now.

It had sent a notice for termination of the joint venture agreement around two years ago, but Baron has not responded.

Hence, the government asking the Mulchandanis to provide the balance sheet of Baron TCL for 2003-04 "which may have been submitted with the Registrar of Companies, Mumbai" is significant since the two partners have not conducted business during the year.

On its part, Baron says it has not terminated the agreement since TCL executives siphoned funds from the joint venture, and in the process left its affiliate contract manufacturing firm Viacom bankrupt.

TCL executives have rubbished the claims saying this was not possible since all cheques were signed jointly by Baron and TCL executives.

On the other hand, it has alleged that Viacom owes TCL around Rs 25 crore, and that TCL revived its 'Bush' brand of colour televisions by stealing 'TCL' dies.

TCL has also brought to the notice of the government that the Mumbai High Court on March 7, 2003, passed a liquidation order against Baron in the petition filed by LG Hotline.

Baron has not responded to several previous correspondences from both TCL and the government. This is primarily because it moved its headquarter from Mumbai to New Delhi.