The company had taken three-months extension from the department of company affairs for holding the annual general meeting on the grounds of non-completion of audit.

Low capacity utilisation coupled with high overheads have taken its toll on Oswal Sugar's bottom line. Capacity utilisation at around 15 lakh tonnes on an installed capacity of around 43 lakh tonnes (2500 TCD) for the year ended March 1999 stood at just over 35 per cent. As a result, the company's turnover has dropped substantially from Rs 73 crore in 1997-98 to around Rs 40 crore in 1998-99. According to a top company source, the company is likely to report a net loss of around Rs 7.5 crore against a net profit of Rs 2.39 crore in 1997-98.

According to a top company official, the company'sbalance sheet for the year ended March 1999 is in the process of finalisation and would be presented in the next couple of weeks.

With a net loss of Rs 7.5 crore, the company's reserves would be completely wiped off. The networth would drop substantially to around Rs 15.5 crore from Rs 23 crore. Further, the balance sheet only shows the value of investments through a note only. The value of listed investments of Rs 7.61 crore as on March 1999 stood reduced at just Rs 0.74 crore. Most of the investments are in its group companies, Punjab Woolcombers and Mukarian Paper.

The declining profitability was visible in the first half itself when the company reported a net profit of just Rs 0.13 crore against a net profit of Rs 3.97 crore in the corresponding half of 1997-98. Turnover for six months ended September 1998 dropped substantially to Rs 18 crore from Rs 37.17 crore in the corresponding half of 1997-98. With a cash loss of over Rs 5.5 crore, the company is likely to find it tough to stay afloat, said thesource. According to the source, the company has also outstanding statutory dues to the tune of around Rs 1 crore. A fire at the company's godown in May this year destroyed goods worth Rs 7-8 crore and the company has yet to receive the insurance claim.

The company has failed to capitalise on the 10-year free sale quota. The licence expires in the 2000-01, when the company would be able to sell only 67 per cent of the sugar on its own.

The company is paying a high interest cost of around 19 per cent on its outstanding loans of over Rs 34 crore and interest outgo for 1997-98 stood at Rs 7.41 crore. At the same time, the company has advanced loans to the tune of Rs 7.8 crore to its group companies. Oswal Sugar's stock on the bourses after peaking at around Rs 70 in 1994 has been languishing below par for the past three years and is currently trading around Rs 4.50.