BIFR stays tax recovery from SM Dyechem

BFIR board had declared SM Dyechem, a sick company in March this year and appointed Industrial Development Bank of India (IDBI) as operating agency to formulate a rehabilitation scheme.

While the possibilities of the company’s revival were still being explored, company pleaded before the board that its properties and bank accounts could be attached for non-payment of sales tax dues by the department, thereby affecting the prospects of its revival.

The department could also issue prosecution notice against the directors of SM Dyechem, the company told BIFR. Consideringthe matter, the board granted stay under the Sick Industrial Companies Act (SICA) for a period of three months or till the finalisation of rehabilitation package.

BIFR has also directed the company to establish effective liaison with the operating agency for preparation of the draft revival package within 30 days of the order being submitted.

SM Dyechem had earlier represented to the board that the petrochemical giant Reliance Industries Ltd (RIL) was planning to buy its glycol division which could not materialise.

Company’s chairman S M Shetty had informed BIFR that the discussions with Reliance were being held through institutions and if it backed out, no other buyer was likely to be there for this unit.

However RIL ruled out such a buyout. SM Dyechem bid to sell the unit to IPCL and Finolex had failed as none had shown interest in taking over the unit, the company had informed BIFR.

The proceeds from the sale of glycol division were to be utilised to liquidate the entire loan of Rs 210 crore andthe principal portion of the working capital borrowings of the company.

The company had also proposed to sell its property S M Centre in Mumbai for Rs 12 crore. SM Dyechem has three divisions – soya, food and glycol out of which soya and food divisions are to be rehabilitated.

BIFR had earlier directed IDBI to segregate the liabilities of the three divisions.