As Coal India's arm Bharat Coking Coal struggles to pay the salaries of its employees, an association of serving and retired executives of the maharatna firm has sought government's help and urged for a suitable package for the recovery of the subsidiary.
Bharat Coking Coal (BCCL) is struggling for fund salaries to its 42,000 employees due to non-payment/part payment from customers in the last few weeks, All India Association of Coal Executives (AIACE) has said in a letter dated May 17, 2020, to Coal Minister Pralhad Joshi.
Under the circumstances, it is requested to help create a sustainable recovery method so that the central government finds itself in a position to help these affected PSUs to come out of woods, the association said seeking a suitable package for BCCL's recovery.
As per rough estimates, AIACE said, Bharat Coking Coal Ltd usually receives around Rs 1,000 crore from consumers every month. Out of this, Rs 450 crore is spent on salaries and another Rs 450 crore on levies and input costs.
The total dues from power companies have crossed Rs 3,200 crore, one of the highest among subsidiaries, due to liquidity crisis faced by electricity generators during the lockdown, it noted.
The entire working capital has been spent on producing and supplying coal to state-owned customers on credit, it said.
In March, the company managed to pay salaries and continued production in April by raising finances against its bank fixed deposits, the limit for which has been exhausted.
Its major customers refused to settle past dues, citing tight liquidity position, it said.
Power companies are also not acknowledging invoices raised recently, as executives are unavailable due to the lockdown, it said, adding that this is acting as an impediment to raising additional working capital through invoice discounting from banks.
The situation started deteriorating from mid-March when payments from BCCL's major customers Damodar Valley Corporation (DVC) and West Bengal Power Development Corporation (WBPDCL) fell to a trickle.
"It is to mention here that these two constitute more than 80 per cent of BCCL sales. In March, they paid only a small portion of their dues, while in April, both these companies did not settle the bill despite repeated requests," AIACE said.
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