Sica query
Aashish
(Querist) 05 October 2012
This query is : Resolved
A Company say "X ltd" is incorporated under indian company Act, 1956. The Company's networth is eroded by more than 100% (i.e., its accululated losses exceeded its paid up capital and free reserves). The Company is in trading activity. The Company has no factory and has no manufacturing unit. Whether the Company is a sick industrial company.?
Since the Company does have manufacturing unit and does not manufacture the articles as mentioned in schedule I to Industrail Development and Regulation Act, 1951, the Company will is not an industrail unit and consequently not a sick industrail unit.
Whether company is sick industrail company or not. If yes, pls jusify.
Thanks in advance.
R.K Nanda
(Expert) 05 October 2012
hypothetical query.
Aashish
(Querist) 06 October 2012
Hello sir,
can you tell me how it is hypothetical query.
prabhakar singh
(Expert) 06 October 2012
NO the company is NOT sick industrail company
Aashish
(Querist) 06 October 2012
Sir,
Thanks for the reply.
Can you please elaborate why it is not sick industrail company.
Is my jusification given in para 2 in the query is correct.?
Guest
(Expert) 06 October 2012
A simple logic is there, when the losses have already exceeded its total networth, how an industrial unit can be considered as a healthy unit? Industrial unit does not always mean a manufacturing unit.
But, to get a proper solution to your query, you have not stated since when the company is existing, which is quite vital for treating a unit as a sick company.
However, a unit or a company, having been in existence for NOT LESS THAN FIVE YEARS, which is found at the end of any financial year to have incurred accumulated losses equal to or exceeding its entire net worth is considered as a sick industrial unit.
Now you can find the answer to your query, yourself, if you know since how long the company is existing.
Aashish
(Querist) 06 October 2012
Sir,
Thanks for the reply.
The Company is in existence for a period of more than five years. So can i treat the Company as sick industrail Company as you said that industrail unit does not necessarily mean to be manufacturing unit.
In that case every company will be sick industrail Company if there networth is eroded by more than 100%.?
But if you see the definition of "sick industrail company", it refers to "industrail Company". Now a industrail company can only be those company which is manufacturing or producing articles mentioned in schedule I to IDRA 1951.
Thanks
Guest
(Expert) 06 October 2012
Are you concerned with SICA dealing with Sick Industrial Companies, or with the IDRA 195 dealing with industrial development? Better refer SICA yourself to remove your doubt.
