Government today approved the financial restructuring of state-run Hindustan Steel Works Construction Limited (HSCL) and its takeover by another PSU NBCC.
HSCL will become subsidiary of National Buildings Construction Corporation Limited (NBCC) with the later holding 51 per cent equity. The government's shareholding in HSCL will be reduced to 49 per cent, according to an official statement.
As per the proposal, the government's loan and along with accumulated interest thereon and outstanding guarantee fee worth Rs 1502.2 crore will be converted into equity and equity capital of the company will be raised to that extent.
The existing paid up equity capital of the HSCL is Rs 117.1 crore and it would be raised to Rs 1,619.3 crore.
After writing off of the accumulated losses, the equity and paid up capital of HSCL will become Rs 34.3 crore. NBCC will infuse funds of Rs. 35.7 crore as equity into HSCL.
Government will also provide one-time support of Rs 200 crore for settling term loans availed from commercial banks. It will also bear the contingent liability of about Rs 110 crore as decided by the Supreme Court in compensation for VRS liabilities.
NBCC and HSCL, both state-run PSUs, are in similar lines of business activities. The decision will benefit in economies of scale for NBCC and would assist in better manpower utilisation.
