Union Cabinet approves takeover of Hindustan Steel Works Construction Limited by NBCC
Posted on: 27 May 2016 09:55:54
27 May 2016 Current Affairs: The Union Cabinet chaired by the Prime Minister Narendra Modi has approved for financial restructuring of Hindustan Steel Works Construction Limited (HSCL) on 25 May 2016. It also approved its takeover by National Buildings Construction Corporation Limited (NBCC) to takeover HSCL.
The decision will benefit in economies of scale for NBCC and would assist in better manpower utilization. NBCC and HSCL will benefit from each other’s resources and expertise. HSCL will be able to fulfill its commitments of execution of projects and the orders.
Features in financial restructuring of HSCL : The existing paid up equity capital of the HSCL is 117.1 crore rupees.Under the proposal, Uni0on Government non-plan loan and plan loan along with accumulated interest thereon and outstanding guarantee fee worth 1502.2 crore rupees. It will be converted into equity and equity capital of the company will be raised to that extent.The paid up equity capital of the company will become 1619.3 crore. Against this as on 31 March 2015, the accumulated losses of 1585 crore rupees will set off.After writing off of the accumulated losses, the equity and paid up capital of HSCL will become 34.3 crore rupees.
Takeover of HSCL by NBCC : NBCC will infuse funds of 35.7 crore rupees as equity into HSCL. HSCL will become subsidiary of NBCC with NBCC holding 51 percent equity holding.The shareholding of Government of India in HSCL will be reduced to 49percent.The equity and paid up capital of HSCL will become 70 crore rupees.HSCL was established in 1964 for construction of modern integrated steel plants.
It diversified into other civil infrastructure construction projects over the years.HSCL started incurring losses since 1978-79 mainly due to absorption of large workforce of several PSUs and private companies increasing the workforce from 4100 in 1970 to 26537 in 1979.The revival package for HSCL approved by Union Government in 1999 and further attempts for financial restructuring the company were not successful.
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