The Hindu Business Line : Nod for transfer of BWEL to Rlys after financial recast package

New Delhi, Jan. 8 The Government has approved the transfer of administrative control of Bharat Wagon and Engineering Company Ltd (BWEL), a sick public sector unit under the Ministry of Heavy Industries, to the Indian Railways after undertaking a financial restructuring package that includes conversion of Rs 77.6-crore loan into equity and waiver of Rs 45.95 crore penal interest.

With the takeover of the company, BWEL would be able to get regular orders for manufacturing of wagons, increase its productivity and improve its financial position.

“The Cabinet Committee on Economic Affairs gave its approval for the transfer of administrative control of BWEL, a subsidiary of Bharat Bhari Udyog Nigam Ltd (BBUNL) to the Ministry of Railways after its financial restructuring,” the Finance Minister, Mr P. Chidambaram, told reporters after the CCEA meeting.

BWEL is a subsidiary of BBUNL under the Ministry of Heavy Industries and Public Enterprises and has the capacity to manufacture 2,500 wagons annually. Two of its manufacturing units are located at Mokamah and Muzaffarpur and third manufacturing unit at Bela in Bihar.

The Railways will provide Rs 6.83 crore equity and a loan of Rs 6.83 crore for capital investment, said the release. It will also engage the existing employees or provide a loan of Rs 10 crore for meeting expenses towards voluntary retirement scheme of 200 employees.

After the approval, the Railway Ministry will be allowed to fill all the Board level posts including that of the chairman and managing director.

According to an official statement, the Department of Heavy Industries would provide Rs 23.27 crore for discharging employees’ dues up to September 30, 2007 and outside liabilities in the form of equity and subsequent reduction of equity by Rs 23.27 crore against accumulated losses.

The Government would also convert a loan of Rs 77.6 crore into equity with a corresponding reduction in accumulated losses.

Further, it would waive normal and penal interest of Rs 45.9 crore as on March 31, 2007 on Government loans. Also, no penal interest would be levied between March 31, 2007 and February 7.

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