BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

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Case No.70/2006 Duncans Industries Ltd. (DIL) The fair value for induction of equity as per valuation report dated 21.2.2011 of M/s Chaturvedi & Partners, Chartered Accountants, is Rs 10 being the average of NAV of (-) Rs 15, Profit earning capacity value (PECV) (-) Rs 56 and Market price of Rs 18. 4 PROMOTERS M/s ISG Traders Ltd and its associate companies are the promoters of DIL. 5 <strong>BOARD</strong> OF DIRECTORS Sl. Name ( S/Sh) Age Qualification Experience Designation No. 1. G.P. Goenka 70 B.Sc, Industrialist heading Chairman the Duncan Goenka Group and ex- President FICCI. 2. T.S. Broca . IAS 78 M.A Ex- Chairman Tea Independent (Retired) Board of India Director 3. R.K.Bhargava . IAS (Retired) 75 M.A. Finance and Corporate Affairs Independent Director 4. M.H. Chinoy 73 Diploma in International & Tea and Tea Marketing related activities. Independent Director Export Management 5. D. Sengupta 68 B.Sc, PGDM Ex- Chairman General Insurance Corporation. Independent Director 6. S.K.Kinra 65 Special Director BIFR. 7. A.K.Goel 60 B.Com, FCA Finance, Accounts, Whole time Taxation, Director Administration and Corporate Affairs. 8. S.P.Gupta 57 B.Tech.(Chemical Process Engineering, Executive Engg.) Business Management, Productivity enhancement etc. Director 6 TECHNICAL & PROFESSIONAL STAFF DIL has adequate technical and professional personnel for operation of its fertiliser and Tea undertaking who looks after the production, marketing, finance and administrative functions. It will, however, have to fill up the vacancies caused due to leaving / retirement of the certain employees in fertilizer division during the period of the non operation of plant. -- 6
7 REASONS <strong>FOR</strong> SICKNESS Case No.70/2006 Duncans Industries Ltd. (DIL) The following main reasons are attributed to sickness of the company: 7.1 Reduction in Retention Price Support (RPS) retrospectively by GoI in 2002 w.e.f. July, 1997 and withholding / deductions / adjustments of RPS receivables in respect of the subsequent period of operation; i) Urea is an essential commodity whose selling price is controlled by the Government. In order to promote the consumption of urea to increase agricultural yields, the GOI introduced Retention Pricing Scheme (RPS). The difference between the RPS and the farm-gate price is reimbursed to the manufacturers by way of subsidy through the Fertilizer Industry Co-ordination Committee (FICC) under the Ministry of Chemicals & Fertilizer. However, GoI/FICC did not revise RPS for the period 1997- 2000 and 2000-03 till June 2002. In the interim period, the industry claimed subsidy on the basis of adhoc notifications from the GoI. ii) The revised retention price for the Company was notified by the Government vide its order dated 5 th November, 2001 having a reduction of Rs 1927/- per MT and Rs 1926/- per MT for the period 1.4.2000 - 31.3.2001 and 1.4.2001 - 31.3.2003 respectively. GoI vide notification dated 4 th June, 2002, also notified the revised pricing policy parameters for the 7 th and 8 th pricing periods covering the period from 1 st July, 1997 to 31 st March, 2003. The impact of the adhoc notifications and the 7 th and 8 th Pricing Policies resulted in recovery of Rs 446.95 Cr from DIL, which was recovered/ deducted / adjusted by the Government. iii) The decision of Government in reducing the subsidy with retrospective effect resulted in erosion of the Company s working capital which led to severe cash flow mismatch resulting in closure of the fertilizer unit in March 2002. iv) The Company s SLP filed in Supreme Court against decision of High Court (vide which the High Court had dismissed the writ petition filed by the company against retrospective downward revision of the fertilizer subsidy by the GOI) was also dismissed vide its judgment dated 10 th February, 2006. Consequently, Rs 446.95 Cr receivable by the Company as subsidy had to be written off during YE 31st March, 2006. Such a heavy loss eroded the entire net worth of the company making it a sick industrial company . -- 7
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