A three-member bench of BIFR heard Industrial Development Bank of India's report on the company's financial position on Wednesday. IDBI, which was appointed the operating agency by BIFR, stated in the report that the company had changed its accounting policy to which it did not agree.

IDBI argued that the company could not be declared sick under Section 3 (1) (o) of Sick Industries Companies Act (Sica) as the loss it suffered was due to change in the accounting policies. A company is declared sick under Section (3) (1) (o) if its entire networth has been wiped off.

BIFR, after hearing IDBI's arguments, did not accept its plea and declared the company sick under Section 17 (3) of Sica.

The company has been given two months to come up with a rehabilitation scheme. PSL owes three financial institutions -- IDBI, ICICI andIFCI -- over Rs 615 crore including Rs 250 crore as interest.

PSL reported a loss of Rs 110 crore on a turnover of Rs 203 crore during the nine-month period ended December 1998. The company is expected to close the current fiscal with a loss of Rs 150 crore. Turnover is expected to be around Rs 270 crore. PSL suffered a loss of Rs 122 crore on a turnover of Rs 157 crore during the year ended March 1998. PSL has an equity base of Rs 88 crore.