PIL posts steep loss of Rs 320 crore

Sources said the huge loss in 1997-98 has been attributed by the company management to change in the method of calculation of depreciation and commissioning of new projects during the year. The company made provision of Rs 259.15 crore towards depreciation as against Rs 26.51 crore in 1996-97. Interest burden more than doubled to Rs 105.32 crore in 1997-98 from Rs 52.23 crore.

Interestingly, the company’s loss in the first half ended September 1997 was barely Rs 4.16 crore on a turnover of Rs 427 crore. For the first six months of 1996-97, it had a net profit of Rs 42.75 crore.

The company’s share price has also taken a severe beating and currently trades atRs 5.9 after touching a low of Rs 4.35 in March. A little over two years ago, the company had come out with a rights issue at a premium of Rs 78 per share through which it raised Rs 100 crore.

Prakash Industries has during the past two years piled up huge liabilities towards financial institutions and inter-corporate deposits. In fact, reports of the company’s financial performance taking a dramatic plunge this year had surprised many in the industry who suspect that such a downturn may have much more than what meets the eye.

The company was last week declared sick by the Board for Industrial and Financial Reconstruction (BIFR) following its application last month.While declaring the company sick, BIFR has appointed Industrial Finance Corporation of India (IFCI) as the operating agency in the case and asked the company to submit a fully tied-up revival proposal within six weeks.IFCI has been asked to study the proposal and submit a viability report to BIFR within six weeks thereafter.

PrakashIndustries has also been facing a multitude of suits slapped by creditors. The company was, till recently, facing more than 15 winding up petitions in the High Court of Punjab and Haryana by leading non-banking finance companies (NBFCs), including Escorts Finance, Bajaj Auto Finance, IndusInd Enterprise & Finance belonging to the Hindujas, Videocon International Leasing and GKW for recovery of dues running into several crores.

The company has claimed that its expansion and diversification plan of Rs 300 crore was delayed and led to a major cost and time overrun in implementation, drying up the company’s cash flows.