The ratings could be favoured by an upgrade of SFL's ratings coupled with its sustained support to SBCL
. Conversely, a weakening of links or support including withdrawal of the corporate guarantee would be a negative rating driver.
To the Government, its main purpose was to create "shell" laboratories and funnel business from physician investors to SBCL in exchange for remuneration.
Officials also threatened to exclude SBCL, but the company settled its end of the dispute in December 1989 by paying a fine of $1.5 million and agreeing to review some of its other arrangements with physicians.
Holden, who represented SBCL in the matter, added that the decision "represents an implicit rejection of the Inspector General's theories set forth in the joint venture Fraud Alert issued in the spring of 1989 and a return to more traditional and generally accepted interpretations of the statute."
Going forward, SBCL's ability to enhance its scale of operations and profitability margins would remain the key rating sensitivities.
Shivalik Bimetal Controls Ltd (SBCL) was incorporated in June 1984 by Mr.
SBCL manufactures different grades of thermostatic-type bimetal and tri-metal strips and parts (both cladded and electron beam welded), electron beam welded Cu-Manganin-Cu Shunt material, components of CPT, electron guns, reflow solder etc.
For FY10, SBCL has registered a total income to Rs.78.06 cr and earned a PAT of Rs.5.22 cr.
Under the arrangement, SBCL received approximately 80% of the revenues, with the remainder divided among the limited and general partners.
The OIG cites an investment solicitation document saying the labs expected to obtain "substantially all the business" from limited partners, and an internal SBCL memo describing the "booting out" of doctors who were not referring enough business.
Patrick Hooper, principal attorney for Hanlester, sees this more as a case of Government "persecution" applauded by competitors of SBCL and Hanlester.
In December 1989, SBCL reached a settlement with OIG in which the company agreed to pay a fine of $1.5 million but did not admit that either its conduct or Hanlester's was unlawful.