Reliefs and concessions to Bharat Bhari Udyog Nigam Ltd. for financial restructuring of Bharat Wagon & Engineering Co. Ltd.
The Cabinet Committee on Economic Affairs today gave its approval on reliefs and concessions for Bharat Wagon & Engineering Co. Ltd. (BWEL) a Central Public Sector Enterprise under the Department of heavy Industries as following:
(i) To convert non-plan loan of GOI amounting to Rs.2.51 crore released by Department of Heavy Industry (DHI) to Bharat Bhari Udyog Nigam Ltd. (BBUNL) towards salary, wages and statutory dues of employees of BWEL for the period October 2007 to December 2007 into equity and subsequently reduce the GOI equity in BBUNL by 2.51 crore against accumulated losses relating to BWEL along with corresponding changes in the Books of Accounts of BBUNL and BWEL and to waive interest accrued on this GOI loan of Rs. 2.51 crore till the date of approval.
(ii) To write-off non-pan loan of GOI amounting to Rs.1.67 crore released by DHI to BBUNL towards salary, wages and statutory dues to employees of BWEL for the month of April 2008 to May 2008 and to waive interest accrued thereon upon the date of approval along with corresponding write-offs in the Accounts of BBUNL and BWEL.
(iii) To release Rs.2.3028 crore as grant to BBUNL towards salary, wages and statutory dues to employees of BWEL for the period June 2008 to 13th August, 2008.
(iv) To convert the remaining GOI loan as on 31.3.2008 amounting to Rs. 0.8205 crore into equity and subsequently reduce the equity by Rs.0.8205 crore against accumulated losses (over and above the GOI loans of Rs.79.81 crore as on 31.03.2008, approved by CCEA in its meeting held on 26.6.2008), along with corresponding changes in the Books of Accounts of BBUNL and BWEL.
With the reliefs and concessions the financial restructuring of BWEL will be completed and the liabilities of the company till the date of transfer to MoR will be cleared. The corresponding liabilities of the BBUNL which was erstwhile the holding company would be cleared. BWEL will achieve positive net worth which will improve its creditworthiness. The company will be able to finance its diversification plans and become viable.
BACKGROUND:
In accordance with the approval of CCEA, this Department transferred the administrative control of BWEL to MoR on 13.8.2008 and took further action to provide the requisite reliefs and concessions.
In the proposal for financial restructuring approved by the CCEA in its meeting on 26.6.2008, it was indicated that figure of employee related dues and outside liabilities may undergo minor change by updating liability up to date of transfer of BWEL to MoR. Further, the figure of GOI loans as on 31.3.2008, which was proposed for conversion into equity and subsequent reduction of equity against accumulated losses has undergone a minor revision during reconciliation with Pay & Account Office, DHI.
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AKT/AD/SH/VK
(Release ID :49617)