Financial Daily from THE HINDU group of publications
Friday, Jun 14, 2002
Industry & Economy
BIFR may go in for wind-up order -- Uncertainty over ECL revival
KOLKATA, June 13
THE fate of Eastern Coalfields Ltd (ECL), one of the oldest subsidiaries of Coal India Ltd (CIL) employing about 1,18,000 employees and officers, appears uncertain.
This is so since the Board for Industrial and Financial Reconstruction (BIFR) has taken a stand that it may advise the winding up of the company if no viable revival plan with means of finance fully tied-up is available by September 15.
BIFR has directed CIL, the Union Ministry of Coal and the West Bengal Government to decide on the various concessions sought by the ailing ECL within 10 weeks and also advised them to convey their decisions to the operating agency - State Bank of India (SBI), so that the operating agency can submit its final revival scheme by September 15.
Commenting on the draft rehabilitation scheme (DRS) which was already submitted by the operating agency, elaborating the salient features of the scheme and the sensitivity of each of the relief and concessions sought to make the company viable, the BIFR Bench advised ECL to re-examine its proposal to close down 26 mines in view of the fact that the company is operating in the core sector.
The board felt that the number of mines to be closed should be as few as possible.
The operational agency was directed to circulate the DRS to all concerned immediately, giving them 10 weeks' time to firm up their opinion.
The agency was also advised to hold, in the meantime, a joint meeting consisting of ECL, CIL, the Ministry of Coal, the Governments of West Bengal and Jharkhand and trade union representatives.
The board particularly directed trade unions to study the draft scheme as to take a pragmatic view, facilitating the company to revive and improve the productivity of workmen.
Meanwhile, BIFR has been apprised by the operating agency that the management of ECL wants financial support of Rs 200 crore per annum for three years by way of grant for implementation of VRS, while support from CIL for discharging wage arrears to the extent of Rs 548 crore (out of the total arrears of Rs 823 crore) was sought.
The support may be extended by way of an interest-free loan repayable in 2005-06, provided all components of the plan are implemented.
ECL wants an approval from the Centre for introduction of cess on open cast coal production for extending relief to underground mines on environmental and conservation grounds.
The company has emphasised the need for infusion of fresh equity and conversion of debt into equity by CIL/the Union Government for rendering the company's net worth positive.
Incidentally, the net worth as on March, 2001 stood at about minus Rs 1,628 crore.
The DRS also stressed the need for enlisting the support of trade unions for outsourcing coal transport by private transportation and hiring of heavy earth moving equipment and also for securing reduction of cess on coal from West Bengal to the level of "royalty'' on coal as applicable in other States.
This apart, support was sought from the State Government and trade unions for redeployment of men and machines to viable/potentially viable units by phasing out unviable units.
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