Chairman s Office Enclosed please find herewith the Guidelines for ...

Ch a irm a n s Office 

En clos ed plea s e fin d h erewith th e Gu idelin es for prepa ra tion of DRS 

a lon g with ch eck lis t for a doption by a ll Ben ch es . Th is h a s th e a pprova l of 

Hon. Chairman and all Hon. Members. 

Date :- 30-04-2008 

PPS to HM(BS) 

PPS to HM(KCV) 

PPS to HM(PR) 

Consultant (AB), Consultant (KG), Consultant & (WVGVRAB), 

BO-II, BO-III, SO(B-I) 

DD(MON) 

(V. Arumugham) 

PPS to Hon Chairman

GUIDELINES FOR PREPARATION OF REHABILITATION SCHEME 

1.1 Th e com p a n y s h a ll provide deta iled, item -wis e in ven tory of a ll its 

fixed and current assets with their book values as on the last ABS date and 

a ls o es tim a ted a s on th e cu t-off-da te (COD). It s h a ll a ls o fu rn is h deta iled 

brea k u p of a ll its lia bilities , a s on th e s a m e da tes , u n der th e h ea ds of (i) 

Secu red du es (of ba n ks, in s titu tion s a n d oth ers with brea k u p in to 

Prin cipa l, s im ple/ com pou n d in teres t a n d oth er ch a rges etc.); (ii) Un s ecu red 

du es in clu din g electricity du es (with brea k u p in to pres s in g creditors a n d 

oth ers ); (iii) Workers du es ; (iv) Du es towa rds Govern m en t/ s ta tu tory/ loca l 

bodies / PF/ ESI: a n d (v) Con tin gen t lia bilities , if a n y. In ca s e th e la s t 

ba la n ce s h eet is yet to be a u dited, provis ion a l figu res m a y be given . In 

s u ch a s itu a tion , th e previou s yea r s ABS figu res s h ou ld be s h own . Th e 

a bove in form a tion ba s ed on ABS/ es tim a tes , a s on a bove d a tes , s h ou ld be 

s u pplied to BIFR (4 s ets ), with in a period of (4) weeks. Th is in form a tion 

s h ou ld be du ly certified by th e com pa n y s Director (Fin a n ce)/ s ta tu tory 

a u ditor. Am ou n ts below Ru pees on e la kh ea ch cou ld be clu bbed togeth er. 

Th e deta ils , a s on th e COD, s h a ll form a n An n exu re to th e reviva l propos a l 

a s a ls o th e dra ft reh a bilita tion s ch em e (DRS) to b e circu la ted by th e Boa rd, 

if reh a bilita tion is fea s ible. No DRS will be circu la ted in th e a bsen ce of th is 

information. 

1.2 Th e com p a n y in th eir propos a l s h a ll s pecify th e cu t off da te (COD) 

a n d in dica te clea rly a s to wh en th eir n et worth will becom e pos itive. Th e 

period for th e reh a bilita tion s ch em e (i.e. th e period by wh ich a ccu m u la tive 

los s es will be wiped ou t) s h ou ld be m in im u m pos s ible a n d in a n y ca s e n ot 

exceed seven years, i.e. the limit fixed by RBI guidelines in this regard.

1.3 In ca s e th e com pa n y h a s n ot u n derta ken va lu a tion of its a s s ets by 

a n y Govt./ Ba n k a pproved va lu er in th e recen t pa s t, th e com pa n y s h a ll get 

its fixed a s s ets va lu ed by Govt./ ba n k a pproved va lu er, with in a period of 

th ree (3) weeks tim e, a t its own cos t. Th e va lu a tion Report m u s t be s h a red 

with a ll con cern ed a gen cies im m edia tely u pon receipt of th e s a m e a n d four 

(4) copies thereof would also be submitted to BIFR. 

1.4 If s o ordered s pecifica lly by BIFR, prior to form u la tion of a n y dra ft 

s ch em e for reviva l, a deta iled Tech n o-Econ om ics Via bility (TEV) s tu dy 

s h ou ld be ca rried ou t by th e OA a t th e com pa n y s cos t. The appointment of 

th e tech n ica l con s u lta n ts wou ld be fin a lized in con s u lta tion with th e 

com pa n y bu t th e OA s decis ion in th is rega rd wou ld be fin a l. Th e TEVS 

a n d Va lu a tion Reports s h ou ld be s h a red with a ll con cern ed a gen cies from 

wh om reliefs a n d con ces s ion s a re bein g en vis a ged im m edia tely on receipt, 

a n d fou r copies th ereof s u bm itted to BIFR. In ca s e th e TEVS va lu a tion 

report is bulky, only a gist thereof may be submitted to BIFR copies. 

1.5 Wh ile con du ctin g th e T.E.V. s tu dy th e followin g s h ou ld be kept in 

view:- 

a) Th e cu rren t in du s try profile a s well a s th e pers pective for th e 

n ext 5-6 yea rs , with a ppropria te dem a n d foreca s tin g a n d 

competitive environment. 

b) Desirable cost reduction measures. 

c) Ma n a geria l com peten ce of th e prom oters a n d th e execu tive 

level suggesting improvements therein. 

d) Contingent liabilities.

2. Th e com pa n y s h a ll s u bm it a com preh en s ive a n d fu lly tied u p 

propos a l, in dica tin g verifia ble m ea n s of fin a n ce, with in a period of fou r (4) 

weeks, to a ll con cern ed from wh om it expects reliefs . Th e propos a l s h ou ld 

prefera bly be ba s ed on RBI pa ra m eters . Fa ilin g th a t, ch a n ces for on e tim e 

settlement (OTS) of secured dues of the company could also be explored. 

3. As a certa in tim e-ga p between prepa ra tion of th e dra ft s ch em e by th e 

compan y/ MA vis -à -vis its s a n ction by th e BIFR wou ld b e in evita ble, th e 

company/OA, besides ensuring repayment of the crystalised dues up to the 

COD, wou ld a ls o en s u re th a t th e fu n d requ ired to m eet s u ch lia bilities for 

this intervening period is also provided in the draft scheme to be considered 

by the Board. 

4. Th e com p a n y s h a ll fu rn is h in th eir propos a l th e n a m es a d a ddres s es 

of a ll con cern ed a gen cies from wh om reliefs / con ces s ion s a re requ ired u / s 

19 of SICA, clearly indicating reliefs & concessions envisaged from each. 

5. Th e s ch em e s h ou ld ta ke ca re of a ll th e kn own lia bilities of th e 

com pa n y. Du es of th e u n s ecu red creditors s h ou ld a ls o be given 

a ppropria te trea tm en t, wh ich , h owever, s h ou ld n ot be better th a n th e on e 

provided for the secured dues of the company. 

6. In res pect of Govt./ s ta tu tory/ loca l bodies , on ly th os e reliefs & 

con ces s ion s s h ou ld be in clu ded wh ich h a ve rea s on a ble pros pects of bein g 

gra n ted. Th e du es of th e pres s in g creditors s u ch a s Sta te Electricity 

Boa rds (SEBs ) etc. s h ou ld be covered. If a n y s a crifices a re expected form 

workers , th e s a m e s h a ll be dis cu s s ed with th em a n d th eir written con s en t 

shall be obtained.

7.1 Th e Com p a n y/ OA wou ld en s u re in fu s ion of a tlea s t 30% of th e tota l 

cos t of th e reviva l s ch em e (exclu din g th e va lu e of reliefs & con ces s ion s a n d 

oth er s a crifices , by th e prom oter(s ). Th e projection s in th e dra ft s ch em e 

s h ou ld n ot exceed th e in du s try s a vera ge a n d th e DSCR s h ou ld n ot fa ll 

below 1.33. 

7.2 Any shortfall in cash-flow projections should be met by the promoters 

by brin gin g in in teres t-free fu n d from s ou rces ou ts ide th e com pa n y. 

Va riou s m ea s u res for s tren gth en in g a n d s trea m lin in g th e m a n a gem en t s et- 

u p like a ppoin tm en t of Con cu rren t Au ditor(s ); con s titu tion of Ma n a gem en t 

Com m ittee a n d a ppoin tm en t of n om in ee Directors s h a ll be s u gges ted. 

Specific da tes s h ou ld be m en tion ed for dis ch a rgin g ea ch of th e 

commitments/obligations. 

8.1 Working capital needs should be assessed in consultation with Banks 

with a con s en s u s a rrived a t on th e m eth od of len din g, qu a n tifica tion of 

irregu la r com pon en t a n d oth er con n ected is s u es , like m a rgin requ irem en t, 

level of inventory, and level of finance as per latest credit policy of RBI. 

8.2 As per loa n a greem en ts , th e com pa n y wou ld be requ ired to rou te its 

s a le proceeds/ tra n s a ction s th rou gh its fin a n cin g ba n ks . Ba n ks s h ou ld 

a llow th e s ick com pa n y to opera te its a ccou n ts with ou t a n y ta ggin g u n les s 

ta ggin g is perm itted by BIFR or a greed to by th e com pa n y. If th e com pa n y 

is perm itted by BIFR to m a in ta in a ccou n ts with a n oth er ba n k, s ta tem en t of 

a ccou n t from s u ch ba n k s h ou ld be given to th e fin a n cin g ba n ks by th e 

company at monthly intervals to enable them to verify the utilization of sale 

proceeds.

9. Th e com p a n y s h a ll n ot dis pos e of, lea s e ou t, en cu m ber or a lien a te 

a n y of its fixed or cu rren t a s s ets , with ou t s pecific prior a pprova l of BIFR. 

However, if th e u n it is workin g, th e cu rren t a s s ets cou ld be u tilized for 

ru n n in g d a y-to-da y opera tion s , s u bject to keepin g proper records th ereof 

a n d rou tin g a ll tra n s a ction s th rou gh th e a ccou n t with th e com pa n y s 

financing bank(s) only unless specifically permitted as stipulated under 8.2. 

10. Th e com pa n y/ prom oter(s ) ca n in du ct s tra tegic in ves tor(s )/ co- 

prom oter(s ), bu t th e com pa n y/ exis tin g prom oter(s ) wou ld en s u re th a t s u ch 

in du ction of s tra tegic in ves tor(s ) / co-prom oter(s ) does n ot en ta il ch a n ge of 

m a n a gem en t (COM) of th e com pa n y. Th e com pa n y/ prom oter(s ) wou ld 

fu rn is h th e deta ils of s u ch s tra tegic in ves tor(s )/ co-prom oter(s ) a lon g with 

th e copies of MOU(s )/ a greem en t(s ) en tered in to with th em . In ca s e COM of 

th e com pa n y is en vis a ged, by wa y of in trodu ction of s tra tegic 

investor(s)/co-promoter(s), the same need to be done through a transparent 

process and the Company/OA shall obtain specific prior permission of BIFR 

for COM. 

11. Th e com p a n y s h a ll n ote th a t protection of Section 22(1) of SICA 

wou ld n ot be a va ila ble to it a ga in s t with h oldin g of a n y of th e workers du es , 

in clu din g EPF & ESIC du es (oth er th a n da m a ges levied, if a n y), gra tu ity, 

wa ges for th e work in g period, etc. Th e com pa n y s h a ll n ot defa u lt in th e 

tim ely pa ym en t of a n y s u ch du es on th e grou n d th a t its ca s e is pen din g 

with the BIFR. 

12. The secured and unsecured creditors are not permitted to file/pursue 

s u its a lrea dy filed a t th is s ta ge. Th e Ben ch , h owever, wou ld recon s ider its 

decision in th is rega rd, if th e direction s is s u ed by th e Boa rd a re n ot 

complied with by the company, within the given time frame.

13. In ca s e of ch a n ge in th e Accou n tin g Yea r beyon d 3 m on th s , prior 

a pprova l for th e s a m e m a y be obta in ed from th e con cern ed Regis tra r of 

Companies. 

14. ESIC a n d EPF a u th orities s h a ll con vey th eir du es with brea k-u p viz 

prin cipa l, in teres t, pen a lties , etc. to th e OA with in a period of 4 weeks, 

along with the acceptable mode of payment thereof as per their policy. 

15. BIFR m a y con s ider ch a n ge of m a n a gem en t (COM) if th e com pa n y is 

n ot a ble to s u bm it a fu lly tied u p reh a bilita tion s ch em e with in a rea s on a ble 

time. 

16. Th e com p a n y wou ld a llow th e OA to h a ve a cces s to a ll in form a tion 

a n d a llow in s pection of th e pla n t a n d fu rn is h a u th en tic da te to th em , a s 

requ ired, prom ptly. An y in s ta n ce of n on -coopera tion of dela y on th e 

com pa n y s pa rt wou ld be viewed s eriou s ly. Th e OA in tu rn s h a ll en s u re 

th a t th e roles of BIFR s OA a n d Ba n k/ Fin a n cia l in s titu tion a s th e len din g 

orga n izin g a re kept dis tin ct. Th e a ctu a l cos t to be in cu rred by th e OA s h a ll 

be borne by the company. 

17. Fa ilin g a va ila bility of a n y a ccepta ble propos a l & oth er releva n t 

in form a tion from th e com pa n y with in th e given tim e fra m e, th e OA m a y 

work ou t a fu lly tied u p s ch em e of its own u n der RBI gu idelin es , if 

pra ctica ble. Su ch a s ch em e cou ld be offered to in teres ted pa rties if ch a n ge 

of management becomes necessary in future. 

18. Th e OA, u pon receipt of th e dra ft reviva l propos a l (DRP) from th e 

com pa n y, wou ld exa m in e/ con s ider th e s a m e in a join t m eetin g (J M) of th e 

con cern ed a gen cies from wh om th e reliefs & con ces s ion s a re bein g 

en vis a ged a n d, in ca s e th e s a id propos a l is fou n d to be fea s ible/ via ble a n d 

a ls o fou n d to be gen era lly a ccepta ble by h e con cern ed a gen cies from wh om

th e reliefs & con ces s ion s a re bein g en vis a ged, th e OA wou ld prepa re a dra ft 

of reviva l s ch em e for th e com pa n y s reviva l in corpora tin g, in ter-alias, 

th erein th e ou tcom e of dis cu s s ion s / decis ion s in th e s a id J M a n d s u bm it 

th e da m e to th e Boa rd, a lon g with th e m in u tes of th e J M for its fu rth er 

con s idera tion by th e Boa rd. Th e OA wou ld com plete th is exercis e of 

prepa ra tion of dra ft s ch em e for th e com pa n y s reviva l with in a period of s ix 

(6) weeks from th e da te of receipt of th e dra ft reviva l propos a l from th e 

company. 

18.2 In ca s e th e OA does n ot receive th e dra ft reviva l propos a l from th e 

com pa n y with in th e s tipu la ted tim e fra m e or th e OA fin ds th a t th e 

com pa n y s dra ft reviva l propos a l is n ot fu lly tied-u p with th e m ea n s of 

fin a n ce a n d/ or th e s a id propos a l is n ot fea s ible/ via ble/ a ccepta ble to th e 

con cern ed a gen cies , from wh om th e reliefs & con ces s ion s a re bein g 

en vis a ged, th e OA wou ld in form th e Boa rd forth with , a lon g with th eir 

views/recommendations regarding further course of action, based on which 

the Board would pass further appropriate order(s) according to law, without 

holding any further hearing. 

19. In case, the company wants to submit a rehabilitation scheme u/s 

17(2) of SICA, th e com pa n y s h ou ld s u bm it th e dra ft s ch em e 

com plyin g with th e gu idelin es m en tion ed a bove except th a t th ere 

will be n o Opera tin g Agen cy/ J oin t Meetin g. Th e com pa n y s h ou ld 

a ls o s u bm it con s en t letters from th e con cern ed a gen cies from 

wh om reliefs a re bein g en vis a ged. In ca s e, s u ch written con s en ts 

a re received from a ll con cern ed a lon g with th e dra ft s ch em e a s 

a fores a id, BIFR m a y con s ider a pprovin g th e s ch em e with ou t 

circu la tion of th e DRS for con s en t a n d with ou t h oldin g a n y 

hearing.

Check list for preparation of Draft Rehabilitation Scheme 

S.No. Subject Tick in the 

appropriate column 

Yes No NA 

1. Ba ckgra ou n d of th e com pa n y a n d produ cts 

manufactured 

wh en decla red s ick by 

BIFR-s u bsequ en t developm en ts / orders , if 

any, and compliance thereof. 

2.1 Cut off date 

2.2 Share holding pattern as on 

2.3 Names of Directors 

3. Reasons for sickness 

4. Stra tegy to overcom e th e rea s on s for 

s ickn es s a n d for reviva l- Ava ila bility of 

m a n a geria l a n d tech n ica l pers on n el- raw 

material-power water-pollu tion con trol 

issues- m a rketin g etc. if a n y Tech n o- 

Econ om ic Via bility s tu dy wa s don e, brief 

details to be given. 

5.1 Deta ils of du es of s ecu red creditors a n d 

s ettlem en t rea ch ed with th em in dica tin g 

the percentage at which they will be settled. 

5.2 Deta ils of du es of u n s ecu red creditors a n d 

h ow th ey will be s ettled (in dica tin g 

percentage at which dues will be settled). 

5.3 Deta ils of du es of workers a n d wh eth er 

th eir written con s en t obta in ed for 

settlement. 

5.4 Deta ils of s ta tu tory du es a n d h ow th ey will 

be settled. 

6. In ca s e of m odified s ch em e, deta ils of 

implementation of the scheme so far. 

7. Financials: 

7.1 Cost of the Scheme and Means of Finance 

7.2 Past performance 

7.3 Wh eth er projected ba la n ce s h eet a n d profit 

and loss A/C attached. 

7.4 Wh eth er projected ca s h flow s ta tem en t 

attached. 

7.5 Wheth er DSCR worked ou t (if th ere a re a n y 

du es to b e repa id- even oth er th a n Ba n k 

dues- over a period, DSCR s h ou ld be 

worked out) 

8. Capital Restructuring 

8.1 Wh eth er a n y s tra tegic in ves tor(SI) is bein g 

brou gh t in a n d OA h a s ch ecked SI s 

background and found it satisfactory

8.2 Any derating of equity- if so, details 

8.3 Details of infusion of funds/equity 

8.4 Price a t wh ich s h a res will be is s u ed a n d 

pres en t m a rket va lu e of th e com pa n y s 

shares. 

8.5 Wh eth er in fu s ion of fu n ds will res u lt in 

ch a n ge of m a n a gem en t (COM); if s o, th e 

process adopted for COM. 

9. Sale of surplus assets, if any, proposed with 

deta ils of th e a s s ets like m a ch in ery a n d 

extent of land and location. 

10.1 Deta ils of reliefs s ou gh t with n a m e a n d 

a ddres s of th e a gen cy con cern ed a n d 

wh eth er th e reliefs s ou gh t a re with in th e 

policy gu idelin es of th e con cern ed a gen cy/ 

Govt. ( n o relief u n der FEMA, Urba n La n d 

Ceilin g Act a n d crim in a l proceedin gs 

should be included) 

10.2 Other terms and conditions 

11. Viability 

11.1 Da te on wh ich n et worth will b ecom e 

positive. 

11.2 Da te on wh ich a ccu m u la ted los s es will be 

wiped out (i.e. end of scheme period) 

12. In ca s e of m erger wh eth er res olu tion s 

pa s s ed by th e s h a reh olders m eetin g for 

m erger. Au dited Ba la n ce Sh eet of th e 

com pa n y with wh om th e s ick com pa n y will 

be m erged is to be en clos ed. Net worth of 

both th e com pa n ies to be s ta ted. Ba s is of 

share exchange ratio is to be mentioned. 

13. Date of J oin t Meetin g a n d wh eth er m in u tes 

enclosed. 

14. In ca s e of DRS u / s 17(2) wh eth er con s en t 

of a ll a gen cies from wh om relief is s ou gh t 

enclosed. 

15. Details of Court case, if any, pending. 

Signature of Authorized Signature of the OA 

Official of the company Date: 

Date: 

NA- not Applicable

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