Financial Daily from THE HINDU group of publications
Sunday, Jan 13, 2002
BIFR confirms winding up of Hindustan Veg Oil
NEW DELHI, Jan. 12
THE Board for Industrial & Financial Reconstruction (BIFR) has confirmed its prima facie opinion of winding up the sick industrial company, Hindustan Vegetable Oil Corporation Ltd (HVOCL).
The Bench also suggested to the Government of India to consider giving one more opportunity to the workers to opt for the voluntary separation scheme (VSS) with a view to avoiding undue hardships to the workmen.
Considering the case, the Bench noted in its report that IDBI, the operating agency (OA), had submitted that the company was expected to incur gross losses throughout the next nine years.
Further, the promoters, Government of India, had also recommended that the unit be wound up. IDBI had also stated that most of the units were technically unviable, the Bench noted. While all the employees of the company had accepted VSS, 122 workmen of the Breakfast Food (BFF) unit had not accepted the scheme.
``As such there was no rehabilitation proposal with means of finance fully tied-up for consideration of the board despite ample opportunities having been given to all concerned,'' the Bench said.
It also noted that the company was not likely to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligations. Hence, it was just and equitable that HVOCL should be wound up, the Board said.
HVOCL was declared as a sick company in December 1999. In April 2001, IDBI had forwarded a copy of the techno-economic viability study report and the valuation report of the company to the Bench. In a joint meeting held on June 12, 2001, the promoters reiterated that they would not be in a position to inject any funds for the revival of the company and that the Union Cabinet had decided to close down HVOCL, the Bench observed.
IDBI had also submitted that most of the units of the company were technically unviable. As for financial viability, except for Mumbai and Bangalore units, all the divisions of the company were expected to suffer continuous losses and that the company as a whole would be incurring continuous losses, it submitted.
The Board, vide its order dated September 2001, issued a show-cause notice as to why the company should not be wound up.
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