Sick industrial company

K.Ramasubbu (Querist) 17 May 2011 This query is : Resolved
A division of Company X was transferred to Company Y by way of slump sale on 01.01.2011. Company Y was registered during the year 2003. There was no activities in the Company Y from the date of registration to 31.10.2010. For the year ended 31.03.2011, company Y incurred a cash loss which exceeds its net worth. Is it a sick industrial company as per SICA?

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Guest (Expert) 17 May 2011
Yes,
Under Sick Industrial Companies (Special Provisions) Act, 1985

Sick industrial company means an industrial company (registered for not less than 5 years) which has at the end of the any financial year accumulated losses equal to or exceeding its entire net worth.

After Amendment

Sick industrial company means an industrial company, which has at the end of any financial year: 2(46AA)

● accumulated losses exceeding

50% of average net worth during 4 years; or

● has failed to repay debts to its creditor(s) in 3 consecutive quarters on demand made in writing for such repayment.