BIFR issues show-cause notice to wind up Sol Pharmaceuticals

New Delhi: The Board for Industrial and Financial Reconstruction (BIFR) has issued a show-cause notice for winding up Sol Pharmaceuticals Ltd (SPL).

"There was no rehabilitation proposal for the consideration of the board despite ample opportunities and time of nearly five years been given to the company and its promoters," the BIFR bench noted.

Considering the case, the board noted that the company has not been able to sort out the pending issues with various agencies, who were objecting to the draft rehabilitation scheme. The proposal envisaged splitting the existing company into two firms. According to the scheme, the Sol unit at Patancheru, Andhra Pradesh, was to be hived off as a joint venture with Teva Pharmaceuticals, Israel, while all the other units will be retained with SPL.

"The taking over of certain units of the company by Teva was in fact a step towards revival of the company through change in management," the bench observed. The company's huge debts, however, "indicate that chances of revival through the process of change in management are remote."

Having thus explored the possibilities, the bench came to the prima facie conclusion that SPL is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations. The company, as a result thereof, is not likely to become viable and hence it is just that it is wound up, the bench said.