 "Parliament")
There will be financial restructuring of central government-owned Hindustan Steel Works Construction (HSCL), engaged in civil infrastructure construction projects, to enable its takeover by National Buildings Construction Corporation (NBCC), also owned by the Centre. This decision was approved by the Union Cabinet on Wednesday.
The paid-up capital of the HSCL is Rs 117 crore. Under the proposal, the government's non-plan and plan loans, along with accumulated interest thereon and guarantee fee, worth Rs 1,502 crore, will be converted into equity. Accordingly, equity capital of the company will be raised to that extent. The paid-up equity capital will become Rs 1,619 crore.
Against this, the accumulated loss of Rs 1,585 crore, as on end-March 2015, will be set off. After writing off the accumulated losses, the equity and paid-up capital of HSCL will become Rs. 34.3 crore. NBCC will infuse Rs 35.7 crore as equity into HSCL and the latter would become its subsidiary. NBCC will hold 51 per cent equity in HSCL and the government holding would come down to 49 per cent. The paid-up capital of HSCL will become Rs 70 crore.
NBCC and HSCL have similar business activities. Established in 1964 for construction of modern integrated steel plants, HSCL has diversified into other civil infrastructure construction. NBCC is a Navratna enterprise, in the construction sector.
The decision will benefit both companies, went an official statement.
HSCL started incurring losses since 1978-79, mainly due to absorption of a large workforce from several other public sector units (PSUs), and from private companies, increasing the staff from 4,100 in 1970 to 26,537 in 1979. The revival package approved by the government in 1999 and further attempts for financial restructuring were not successful.
A Committee of Secretaries recommended in July 2015 that the steel ministry explore the possibility of merger, takeover of HSCL by another PSU in a related sector. A Group of Secretaries (GoS) was constituted to prepare a paper on the way forward. On its recommendations, a Cabinet note was prepared for financial restructuring of HSCL and its takeover by NBCC.
The government will provide one-time support of Rs 200 crore for settling term loans from commercial banks. It will also bear the contingent liability of Rs 110 crore as decided by the Supreme Court in compensation for voluntary retirement scheme liabilities. In addition, it will pay the interest dues on the bank loans for 2015-16, amounting to Rs 44 crore, and the amount of interest up to the date of takeover of HSCL by NBCC.
Other decisions
The Cabinet also approved financial restructuring of Hindustan Fertilizers Corporation (HFC), to revive the sick company. This would include waiver of a government loan of Rs 1,916 crore as on end-March 2015 and interest dues on the loan as of date. The interest amount was Rs 7,163 crore as on March 31 last year.
The Cabinet also approved transfer of 56 acres of the ash dyke land of its Barauni unit to Bihar State Power Generation Company, to settle HFC dues and for faster revival of that unit.
This Cabinet decision will facilitate deregistration of HFC from the Board for Industrial and Financial Reconstruction, by making its net worth positive. The Barauni unit has been defunct since January 1999.
There is no functional urea unit in the eastern part, except two small units at Namrup (Assam). The annual consumption of urea in the country is 32 million tonnes, of which 25 mt is produced indigenously. A new unit at Barauni will meet the growing demand of Bihar, Bengal and Jharkhand. It will also ease the pressure on railway and road infrastructure due to transportation of urea from the western and central regions, also saving in government subsidy on freight. This unit will create opportunities for 400 direct and 1,200 indirect jobs.
The Barauni unit will also serve as an anchor one to the Jagdishpur-Haldia gas pipeline being laid by GAIL, considered important for growth of the economy and infrastructure in eastern India.
YES Bank
The Cabinet Committee on Economic Affairs (CCEA) also granted approval for raising the foreign investment limit to 74 per cent in YES Bank from the existing 41.87 per cent, without any sub-limits. This will result in foreign direct investment of $1 billion (Rs 6,900 crore).
Approvals also came for:
- Amendments to The Indian Institutes of Technology Act, 1961, for incorporation of six new IITs at Tirupati (AP), Palakkad (Kerala), Dharwar (Karnataka), Bhilai (Chhattisgarh), Goa and Jammu, and conversion of Indian School of Mines, Dhanbad, to an IIT;
- An agreement with Japan for promoting sustainable, stable and low-carbon thermal power development in India;
- Cadre review of the Indian Postal Service;
- Establishment of the National Institute of Technology, Andhra Pradesh;
- Agreement with Maldives for strengthening of cooperation in tourism;
- Amendments in the Constitution (Scheduled Tribes) Order, 1950, to modify the list of STs in Assam, Chhattisgarh, Jharkhand, Tamil Nadu, Tripura and Puducherry.
