The latest financials of the company disclose that its net worth stands at Rs 4.86 crore (including the capital subsidy from Sipcot) compared with accumulated losses of 6.76 crore as on June 30, 1998. This networth figure, however, does not take into account the proceeds received from a proposed 1:1 rights issue at par.

Wockhardt Ltd, which holds close to 70 per cent of Wockhardt Healthcare's capital, has already paid up around Rs 2.3 crore as share application money for the proposed rights issue. Therefore, with the inclusion of this share application money, Wockhardt Healthcare's networthstands at Rs 7.11 crore. Industry experts are, however, unsure if share application money pending allotment could be considered part of networth.

Wockhardt's official spokesman, however, denied that the company's subsidiary was headed the BIFR way. "As on June 30, 1998, accumulated losses appearing in the balance sheet are of Rs 6.76 crore against the share capital of Rs 6.95 crore. Schedule I of the balance sheet shows that Rs 4.70 crore is the equity capital and Rs 2.25 crore is the share application money pending allotment," he said.

"The board of directors has suggested going in for a rights issue, thereby increasing the equity to the extent of Rs 4.70 crore. Approval from shareholders on this has been taken on December 11, 1998. We are in the process of completing the procedure of the rights issue. With the rights issue, the equity capital of the company will be around Rs 9.30 crore," the official added.

He said that the company had made a profit of Rs 15.59 lakhs in the first quarter(July-September) and was hopeful that this profit level would be maintained in the current quarter ended December 1998.

Industry sources, however, claim that Wockhardt is unclear about whether its subsidiary falls within the purview of SICA and could seek an accurate interpretation on this front. As per the provisions of SICA, the term sick industrial company is applicable to a company (registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entire networth.

Significantly, Wockhardt Healthcare has registered handsome gains on the income and profitability front during 1997-98. While income rose by 90 per cent to touch Rs 22.94 crore, profits were higher at Rs 1.01 crore as against Rs 50 lakhs in the previous year. However, prior years adjustments and the premium on redemption of debentures have forced the company to carry forward a loss of Rs 6.76 crore.