The Hindu Business Line : Eastern Coalfield revival scheme gets shareholders' nod

ALL stakeholders in the ailing Eastern Coalfields Ltd (ECL), which include Coal India Ltd (CIL), governments of West Bengal, Jharkhand and operating trade unions, have approved a revised draft rehabilitation scheme for consideration of the Board of Industrial & Financial Reconstruction (BIFR). Incidentally, the scheme has obtained support from the Union Ministry of Coal.

The scheme has envisaged that the company's net worth would become positive by Rs 28 crore at the end of 2008-09 with the recent decision of the Centre and CIL waiving ECL's unsecured loan of Rs 519 crore and the conversion of the current account balance as on March, 2003 of Rs 1,532 crore to equity share capital immediately on the sanction of the rehabilitation scheme by BIFR.

Similarly, waiver of arrear interest as on March, 2003, amounting to about Rs 169 crore is agreed upon before the end of the 2003-04 fiscal, while CIL has agreed to waive future interest amounting to about Rs 34 crore on the unsecured loan and Apex charge of Rs 14 crore.

The company's capital restructuring in the form of waiver of loan and conversion of the current capital account into equity is considered the last option to bail the company out of the purview of BIFR. The draft scheme has also made necessary arrangements to reduce manpower totalling 26,386 from 2003-04 to 2009-10, thereby enabling the company to save cost on wages.

Meanwhile, trade unions are reported to have agreed to the suspension of mining activities at five mines where the reserves will be exhausted within a year. They demanded that the operation in all other working mines should be continued and an effort should be made to increase production and productivity and reduce the losses to the extent feasible through manpower rationalisation.

The draft scheme has recommended that the production in three large under ground (UG) mines, namely Khottadih, Jhanjra, Sarpi be increased by introduction of "continuous miners," while the ECL management has been asked to deploy longwall technology at Jhanjra UG mine and complete other new projects. The production target from UG mines has been set at about 15 million tonnes (mt) in the year 2010-11 from the revised target of 10.78 mt during 2003-04.

The increase in open cast (OC) production has been recommended by expansion of Rajmahal project from 10.5 mt to 17 mt and opening of new project at Chuperbhita for a production of 4 mt. With this, OC production is projected to go up to the level of 27.2 mt in 2011-12 from the existing revised target of 16.72 mt during 2003-04.

The scheme has envisaged generation of additional production to the order of 23.25 mt by outsourcing of 17 patch deposits which will generate an additional revenue of about Rs 1,680 crore during 2003-04 to 2010-11.