Monday, December 22, 2008

BIFR & EGOM take steps to revive NTC mills


Following steps, as approved by the Board for Industrial and Financial Reconstruction (BIFR) and Empowered Group of Ministers (EGOM), have been taken to make the company profitable:(i) To bring down the administrative cost of NTC, 9 subsidiary-corporations of NTC have been merged with NTC Holding Company, making it a single company with a single Board of Directors, as against 10 Companies for NTC in the past.(ii) 67 unviable mills have been closed and compensation paid to the surplus employees of these closed mills who opted for Modified Voluntary Retirement Scheme (MVRS).(iii) By offering MVRS to the surplus employees, the number of employees in NTC has been brought down to 12234. Under this scheme, 59,179 employees have availed voluntary retirement.(iv) 22 mills have been identified for modernization by NTC itself. Out of these, 15 mills have so far been modernized. In addition to this, modernisation of 16 mills through Joint Venture (JV) route has also been finalized.This information was given by the Minister of State for Textiles, Shri E.V.K.S. Elangovan in a written reply in the Lok Sabha on December 22, 2008.

CABINET APPROVES FINANCIAL RESTRUCTURING OF KONKAN RLY

Improves Net Worth of the Corporation
In a move that bodes well for Konkan Railway Corporation, the Cabinet Committee on
Economic Affairs (CCEA) has approved KRCL’s proposal on financial restructuring, thus
enabling the Corporation to continue as a PSU even after discharge of its debt liabilities. The
proposal, recommended by the Board of Directors and the Ministry of Railways, was
submitted through BRPSE (Board for Reconstruction of Public Sector Enterprises) for
approval of CCEA (Cabinet Committee on Economic Affairs).
Konkan Railway is the first and the only railway project in the country to be executed on BOT
basis. To enable timely completion of the project, while the Corporation had to resort to
commercial borrowings on a high interest rate, it was not extended any concession like
exemption from payment of dividend during construction phase. Due to this, the debt liabilities
kept mounting. Add to that the losses incurred due to non-materialization of the projected
traffic growth along the route. The Corporation, being a public utility project, was extended
loans by the Ministry of Rlys to meet its debt liabilities.
As per the financial restructuring proposal, the cost of debt provided by Ministry of Railways,
together with interest accrued thereon, will be converted into preferential shares redeemable
at the end of 15 to 20 years. The dividend payable will be non-cumulative at the dividend rate
Ministry of Railways (MoR) pays to Government of India. Any future loans provided by
Ministry of Railways to KRCL will also be converted into non-cumulative redeemable
preferential shares.
The financial assistance will be restricted to the next three years i.e. financial year 2008-09 to
2010-11. In debt servicing, the full interest amount and 50% of the redemption amount will be
made available to KRCL as and when due. These funds paid to KRCL will also be converted
into preferential shares redeemable after 15 years.
Restructuring of the finances would improve the Net Worth and Debt-Equity ratio of KRCL and
make it into a profit making organization soon. The Corporation would be able to meet its
liabilities in future provided the traffic business plan materializes. Therefore the Board of
Directors recommended reviewing the proposed arrangement before the lapse of three years,
as there may be a cause to extend this arrangement for a few more years keeping in view the
unforeseeable future. With this now, Konkan Railway will also be able to bid for big
infrastructure projects.

Wednesday, December 17, 2008

BRPSE working on revival package for Burn Standard

Working on the revival package for Kolkata-based Burn Standard & Company, which is under the Board for Industrial and Financial Reconstruction (BIFR), the Board for Reconstruction of Public Sector Enterprises (BRPSE) is mulling to ask the Railway ministry and the Steel Authority of India (SAIL) to take over its two wagon manufacturing units and one refractory unit, respectively. Nitish Sengupta, chairman of the BRPSE, who met Burn Standard officials here today, said that the board will now see if there was any legal snag that could stall the process of a take-over of the units. Burn Standard had two wagon manufacturing facilities, one at Howrah and another at Burnpur in Burdwan district of West Bengal. Its refractory unit was located at Salem in Tamil Nadu.
"The interest amount on the loans taken by the company is very high. It could be to the tune of Rs 150 crore," Sengupta said.
"We do not want to shut down or give grants to sick PSEs. Instead, companies should either look at tying up with a private partner or listing at the bourses wherever possible," he added.

Revival of NTC Mills

So far National Textile Corporation (NTC) has closed 67 unviable mills under Industrial Disputes (ID) Act, 1947 as per rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) and approved by Government. At present, there is no proposal to revive, reopen and modernize the above closed mills under public-private partnership. The original Revival Scheme was approved by the BIFR subsidiary-wise in April, 2002. Subsequently, a Modified Scheme (MRS-08) for NTC has been approved by BIFR on 05.09.2008. As per MRS-08, the period of implementation of revival scheme for NTC has been extended upto 31.03.2009. The total cost of MRS-08 is Rs.9102 crores which is self financing. The resources are to be generated by sale of assets of closed mills and surplus assets of viable mills. Through MRS-08, BIFR has approved closure of 12 more mills. MRS-08 has also recommended writing off of Government loan and waiver of interest thereon, as on 31.03.2007. In addition, various reliefs and concessions on Income Tax, Wealth Tax, Capital Gain Tax etc. have also been approved by BIFR. This information was given by the Minister of State for Textiles, Shri E.V.K.S. Elangovan in a written reply in the Rajya Sabha today. *******