BIFR declares ATV Projects sick

NEW DELHI, JUNE 6: The Board for Industrial and Financial Reconstruction BIFR has declared ATV Projects a sick company and appointed In...

NEW DELHI, JUNE 6: The Board for Industrial and Financial Reconstruction BIFR has declared ATV Projects a sick company and appointed Industrial Development Bank of India IDBI as operating agency for preparing the rehabilitation package for the company.

The board in a recent order said the company fulfilled all criteria for sickness laid down in the Sick Industrial Companies special provisions Act and the BIFR was satisfied that the company had become sick. The four-member bench has declared ATV Projects as sick company after its networth of Rs 167.17 crore up to June 1998 was completely eroded with an accumulated loss of Rs 178.46 crore.

ATV Projects has been asked by the Board to give its comprehensive rehabilitation proposal to IDBI along with means of finance for its revival.

BIFR has also directed the company not to dispose of its fixed assets without the prior approval of the Board. However, the Board has said that the company can continue to rotate its current assets in the normal course ofbusiness by ensuring that all sale proceeds and other transactions are routed through its financing bankers only.

The BIFR order also said that the board would watch the various directions given by it for rehabilitatation of the company and if ATV projects was not able to make the expected progress, the bench would consider allowing all the involved secured creditors to pursue legal process for recovering the money.

Problem for the company started when non-convertible debentures NCD of Rs 44 crore issued by it to 13 banks became due in 1996-97 and the company was unable to redeem the same. Banks treated the matured amount as current liability and marked it against the company8217;s need-based working capital. This resulted in a severe working capital crunch. Apart from it, banks also refused to issue guarantees for the company leading to a liquidity problem. ATV Projects had also changed the method of applying depreciation in 1997-98 from straight line to written down value method which led to the erosionof its entire networth.

Some of the financial institutions, however, stated that had the company not changed its depreciation method, it would not be sick.