ICICI, one of the main lenders of PSL, had earlier approached Delhi High Court saying the balance sheet of the company is fraudulent as it does not reflect the true picture of the profit and loss figures ICICI had contended that referring the company to the BIFR was hence illegal. While the Delhi High Court had stayed the BIFR proceedings in February this year, it later dismissed the petition on May 14.

Following this, in an internal meeting of BIFR this week, the members decided to give a go-ahead to IDBI to investigate into the accounts of the company and will be soon convey it formally to IDBI. In the last hearing by BIFR in January, the bench observed that there was sudden increase in the accumulated losses of thecompany which rose to Rs 318.35 crore as on June 30, 1997 in one year only.

There was also an increase in the operational expenses of Rs 17 crore as also in interest from Rs 42.89 crore in 1995-96 to Rs 120 crore in 1996-97. Similarly, the depreciation amount rose sharply from Rs 16.96 crore in the previous year to Rs 107.70 crore during 1996-97.

The bench also noted the issue raised by ICICI that the company's accounts do not appear to reflect a true picture in as much as Rs 33 crore capitalised earlier had been debted to profit and loss account as on June 30, 1997.

Further, it was not clear whether the sales of Rs 55.61 crore (by way of credit notes), 90 per cent of which are purported to have been affected to the group companies of PSL, had been adjusted, written off or treated otherwise.

The bench pointed out that the aforesaid discrepancies needed to be clarified by the company and the reasons for change in the accounting period from 12 to 15 months also need to be spelt out.

The main purposeof the bench was to establish the sickness of the company and determine measures for its revival. In view of the above mentioned issues, the Bench appointed IDBI as the operating agency to enquire into the accounts of the company and also on the points raised by ICICI.

Later, IDBI was asked to stop the investigate into the company's accounts based on the Delhi High Court's order, till further orders from the court.