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Report No. 143

Ambalal Sarabhai Enterprises Limited, Post Box: 231, Wadi, Baroda-390007.
Phones: 321213: 221331, 321455 Gram: ASE Telex 0175.221 SARA IN

May 25, 1921

Mr. S.P. Upasani,
Company Law Board,
Government of India,
Dept. of Company Affairs,
5th Floor, 'A' wing, Shastri Bhavan,
Dr. Rajendra Prasad Road, New Delhi-110001.

Dear Sir,

Sub.: Action under section 58A(9) of the Companies Act, 1956.

We thank you for the patient hearing given to us by your Honour and Mr. Mehta, Member of the Board when the undersigned accompanied by Mr. K. Subramanian, the Secretary of the Company, appeared at a hearing, before you on 16th May, 1991 pursuant to the directions contained in the letter marked Secretary-Company Law Board. New Delhi, No. 1 /91 /Misc/CLBS dated 24th April, 1991.

During the meeting, we submitted to you various documents and information required by you about public deposits which is summarised in the following table:

Balance Deposit

Total Deposit as on 1st April

Fresh Deposits accepted

Repaid During accepted


Matured and remaining unpaid


1-4-1987 to 31-3-1988







1-4-1988 to 31-3-1989







1-4-1989 to 31-3-1990







1-4-1990 to 31-3-1991







The Company had thus over a period of time substantially reduced the fixed deposits which were around Rs. 627.37 lakhs as on 1-4-1987 to Rs. 192.88 lakhs. Similarly, the fixed deposits matured but remaining unpaid, which aggregated to Rs. 385.95 lakh as on 31-3-1986 have been brought down to Rs. 77.11 lakhs as on 31-3-1991. Thus would show the intention and bona fides of the Company in meeting its obligations to the public deposit holders.

The Company has always been making sincere efforts to repay the matured fixed deposits at the earliest. But certain factors which were beyond the control of the company had adversely affected its operations and the company has been incurring heavy operating losses for the last few years which has imposed severe liquidity constraints on the Company.

The following factors have largely contributed to this situation:

(1) Although the consortium banks had assured financial assistance for additional Rs. 600 lakhs as early as in October 1988, so far the banks have not released any funds. As a result there has been gross under utilisation of the capacities although there is a good demand for the company's products in the market.

(2) The Company is engaged predominantly in the manufacture of basic and essential drugs, prices of which are controlled by the Government under Drug Price Control Order. The prices fixed for the products of the Company were uneconomic. There was inordinate delay in sanctioning legitimate revision in prices and as a result in the intervening period the cost of inputs got further hiked.

Inspite of these constraints and the losses incurred from year to year the company has maintained a delicate balance between meeting corporate obligations like repayment of fixed deposits, etc. on the one hand and continued production of even larger volume of life saving drugs on the other hand. This has naturally resulted in delay in repayment of fixed deposits with the prescribed time. It will, however be appreciated that the Company had brought down substantially the level of matured deposits remaining unpaid from about Rs. 386 lakhs as on 31-3-1988 to Rs. 77 'Ails as on 31-3-1991.

Your honour appreciated our aforesaid difficulties and had kindly suggested that the Company should repay by August 1991 deposits which have matured upto 31-12-1987, and have remained unpaid and repay the balance before 30-6-92. We give below the break-up of the fixed deposits which are matured and have remained unpaid and shall repay the same as suggested by you.

Maturity Period

No. of Accounts

Amount (Rs. lakhs)

Repayment Schedule

Upto December 1986



Before 30-6-1991

1-1-1987 to 31-12-1987



July/August 1991

1-1-1988 upto 31-3-1991



Upto June 1991


In addition we shall ensure that the interest on current live deposits is paid in time and we shall undertake payment of overdue interest on delayed payment of fixed deposits, once the principal amount of deposits is paid.

We request you to kindly approve the above scheme of payment.

Thanking you,

Yours faithfully,
For Ambalal Sarabhai
Enterprises Ltd.

(M.N. Parikh)

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