Morepen Laboratories on Thursday told the Company Law Board that it was in advanced stages of negotiations with a foreign investor who would bring in Rs 60 crore (Rs 600 million), part of which would be utilised to clear the dues of small depositors which stood at Rs 157 crore (Rs 1.57 billion).
At a closed-door meeting with CLB officials, a senior company executive said, "The company has turned cash positive in the last two quarters. We are planning to increase the amount of hardship payment from Rs 1 crore (Rs 10 million) per year to Rs 2 crore (Rs 20 million) per year and expect to pay all the dues in the next three years."
The company has a large number of small depositors who have been collectively paid only Rs 2.5 crore (Rs 25 million) till now after the company defaulted on its fixed deposits in 2003. About 1,000 cases relate to small depositors who are either senior citizens or are suffering from serious financial difficulties.
Morepen has submitted a reorganisation scheme before the Shimla high court, which is slated for hearing on October 26 and November 11.
"If approved by the court we will be able to get Rs 18 crore (Rs 180 million) from the amount of global depository receipts proceeds of Rs 72.5 crore (Rs 725 million) which are locked up in an escrow account due to the dispute with its secured lenders," the executive said.
While the depositors told CLB that the company's cheques were bouncing and there was no communication from the company, the executive said that since April 2004 no cheque had bounced.
Morepen had defaulted on repayment of fixed deposits and its proceeds from the GDRs have been stuck with the Debt Recovery Tribunal as it has also defaulted on its repayment to financial institutions.
Morepen had raised $15.25 million in GDR in 2003, which are locked up in a case at DRT. The government has, in its reference under the Companies Act, alleged mismanagement on the part of the company based on the scrutiny of accounts as on September 30, 2003.
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