Further, as its net worth was wiped out as on March 31, 1999, the company referred the matter to the Board for Industrial & Financial Reconstruction (BIFR). The board registered Torrent Gujarat as a sick industrial undertaking on May 31 this year. As a result, all secured and unsecured liabilities of the company have been frozen.

In a confidential note prepared last week, Torrent group chairman Sudhir Mehta has admitted that owing to the "grim situation concerning the Penicillin-G business despite a few favourable policy measures having been initiated by the Central government in the Union budget and Exim policy, 1999, the company, during the financial year 1998-99, has incurred a net loss of Rs 44.45 crore, and its accumulated losses as atthe end of March 31, 1999, has increased to Rs 108.84 crore".

"This has resulted in a severe resource crunch and the company has not been able to redeem the first instalment of NCDs falling due for payment on February 24, 1999, and also the payment of interest for the half year ended March 31, 1999," Mehta adds.

Given the company's financial situation, the Gujarat government had declared Torrent Gujarat as a relief undertaking under the provisions of the Bombay Relief Undertakings (Special Provisions) Act, 1958, on May 3 this year.

While Mehta maintains that "as provided under the Sick Industrial Companies Act, we are preparing a scheme of revival taking into account present and anticipated market conditions," the assurance is expected to hold little succour for the company's debenture holders who stand to lose heavily.

The face value of the company's debentures was Rs 55 per instrument, while the market load was 100 debentures. What is expected to cause consternation among the debenture holders isthat while Torrent Gujarat's equity is a mere Rs 45 crore, it incurred a net loss of Rs 44.45 crore during 1998-99. Against this, the company's sales turnover was a relatively low Rs 87.12 crore.

The Torrent group's financial woes have recently been compounded by fresh roadblocks created by the Foreign Investment Promotion Board (FIPB) and financial institutions in the way of offloading the group's 40 per cent equity in Gujarat Torrent Energy Corporation in favour of PowerGen. Gujarat Torrent Energy is a joint venture between Torrent and the British power major.

The deal, if concluded, would have fetched Torrent a hefty Rs 1,100 crore, enough to pull out several of the group companies from financial wilderness. Delay in clearance of the transfer of equity is being perceived as a setback to the group's revival and expansion plans, according to corporate observers here.