Dogged by prolonged lockout of its manufacturing unit and inability to make a turnaround, Kanpur-based two-wheeler manufacturer LML Ltd on Friday declared itself a sick unit and decided to approach the Board for Industrial and Financial Reconstruction (BIFR).
The board of directors of LML, which met on Friday after approving the audited accounts of the company for the period April 1, 2005 to August 31, 2006, has decided to refer the company to BIFR.
The company informed the Bombay Stock Exchange that after taking into consideration the continued lock-out of two wheeler operations and the present prevailing condition coupled with the uncertainty of generation of profits in near future, the board decided to reverse the provision of deferred tax asset (DTA).
As a result, the net worth of the company as on August 31, 2006 has been completely eroded and consequently it has become a sick industrial Company under Sick Industrial Companies (Special Provisions) Act, 1985, it said.
Company officials, including managing director Deepak Singhania, were not available for comments despite repeated attempts.
LML, which sold once-successful models like 100 cc Freedom, had completed a financial restructuring last year that put it on a recovery path, reducing the heavy debt burden of Rs 310 crore (Rs 3.10 billion) to around Rs 108 crore (Rs 1.08 billion).
It had also then raised fresh funds of nearly Rs 228 crore (Rs 2.28 billion) via the issuance of equity and preferred shares and convertible bonds to overseas investors such as Credit Suisse First Boston.
However, trouble started brewing afresh in the company earlier this year when workers struck work in March and the company declared a lockout at its plant in Kanpur since then.
In the meantime, the company had said it was working for restructuring of its business, which includes the possibility of a strategic partnership. It had cautioned that pending its outcome, LML's production, sale and normal operations may be adversely impacted.
The company had not announced its results for the financial year ended March 31, 2006. The promoter and promoter group currently hold about 32 per cent stake in the company.
© 2024 Rediff.com -