ORDER: RIAZ AHMAD, CHAIRMAN.--1. Metalex Corporation Limited (hereinafter referred to as the undertaking) is a private company with following value of assets as per its balance sheets:- ((Table)) Total value of assets Rs. 1,33,07,673 Rs. 1,08,43,164 Rs. 1,21,54,830 Rs. 1,57,79,085 Rs.
1,43,32,099 2. As the value of assets exceeded one crore of rupees and the undertaking was not a public company, this constituted undue concentration of economic power within the meaning of section 4(a)(i) of the Monopolies and Restrictive Trade Practices (Control and Prevention)
Ordinance, 1970 (V of 1970) (hereinafter referred to as the Ordinance) and contravened the provisions of section 3 of the Ordinance. The Authority, being satisfied that it was necessary in the public interest to make an order under section 12(1)(a)(i) of the Ordinance, issued a notice to the undertaking under section 11 indicating the Authority's intention to make an order requiring it to convert itself into a public company and to show cause why such an order may not be made. 3.
The undertaking in its reply of 12th of March, 1977, took up the plea that the value of assets as defined in section 2(1 )(o) of the Ordinance, meant the value of fixed assets as reduced by the depreciation allowance and accordingly the value of assets of the undertaking on 31st March, 1976 was Rs. 37,93,029 which did not exceed the statutory limit of Rs. 1 crore. Apart from this the net value of other assets was only Rs. 15 lacs after deducting current liabilities of Rs. 90 lacs from the current assets of Rs. 105 lacs. From this it was probably intended to be argued that even after taking into consideration the net working capital of Rs. 15 lacs the total value of assets remained below the limit of Rs. 1 crore. Some other facts were also stated in the reply but they are not relevant for the purposes of this order.
4. The undertaking was given opportunity of being heard and of placing before the Authority facts and material in support of its contention. On the date of hearing, Mr. Husain Qasam, Managing Director appeared alongwith Mr. M. Iqbal, Chartered Accountant and reiterated the points mentioned above. It was also urged that the value of current assets was the maximum on the date of the balance sheet due to seasonal nature of the business and that during the major portion of the year these assets materially disappeared.
5. The argument that the term "value of assets" as defined in clause (o) of sub-section (1) of section 2 of the Ordinance covers only the fixed assets on which depreciation is allowable for the purposes of Income Tax Act, 1922, and not all the assets, has no force. The specific point had come up before the Authority in more than one case and it had been decided that the term "value of assets" as occurring in the Ordinance meant value of all the assets including fixed and current assets as reduced by the depreciation allowance which, had to be worked out at the normal rates for purposes of the income tax assessm ent. The matter was discussed in detail in the case of Lahore Textile and General Mills Limited reported as PLJ 1973 Tr.C. (Monopoly) 9 and also in the cases of Messrs Ciba Geigy (Pakistan) Limited reported as PLJ 1973 Tr.C. (Monopoly) 68 and Messrs Jupitor Textile Mills Limited reported as PLJ 1973 Tr.C. (Monopoly) 276.
6. The question that the liabilities amounting to Rs. 90 lacs to be deducted from the value of current assets is also devoid of force. This point was also discussed and decided in the case of Lahore Textile and General Mills Limited referred to above and it was held that liabilities are not to be deducted from the assets for determining the value of assets for the purposes of the Ordinance.
7. The contention that the value of stocks and other current assets comes down during the course of year and the value of assets gets reduced is not substantiated by any evidence. As already indicated in the first para of this order the total value of assets of the undertaking exceeded Rs. 1 crore according to its own annual balance sheets.
8. During the course of the hearing, the Managing Director of the undertaking came round to the views expressed by the Authority and agreed that the undertaking had no objection to convert itself into a public limited company.
9. In view of the above position we direct the undertaking, under section 12(1 )(a)(i) read with section 11 of the Ordinance, to take immediate steps to convert itself into a public limited company as envisaged in the Companies Act, 1913 (VII of 1913), and also to file with the Registrar Joint Stock Companies a prospectus or a statement in lieu thereof containing the particulars set out in the form marked II in the Second Schedule to the said Act as required by section 154 thereof. This should be done by 15th February, 1978 failing which action under section 19(2) of the Ordinance may be taken.