New Delhi, May 25 (IANS) The government on Wednesday approved the financial restructure package for Hindustan Steel Works Construction (HSCL).
The decision was taken by the union cabinet in its meeting chaired by Prime Minister Narendra Modi.
The cabinet also approved HSCL's takeover by National Buildings Construction Corporation (NBCC).
According to the cabinet, under the approved proposal, the government will write off the accumulated losses of the company, which amount to Rs.1,585 crore.
"After writing off of the accumulated losses, the equity and paid up capital of HSCL will become Rs.34.3 crore," the cabinet said in a statement.
"NBCC will infuse funds of Rs.35.7 crore as equity into HSCL. HSCL will become subsidiary of NBCC. The equity and paid-up capital of HSCL will become Rs.70 crore."
The statement said the move will reduce the shareholding of the government in HSCL to 49 percent.
"NBCC and HSCL are Government of India enterprises with similar lines of business activities," the statement said.
"The decision will benefit in economies of scale for NBCC and would assist in better manpower utilisation."
The statement further said that after the takeover, HSCL will be able to execute its pending projects.
"Government of India will provide one-time support of Rs.200 crore for settling term loans availed from commercial banks," the statement added.
"It will also bear the contingent liability of Rs.110 crore (approximately) as decided by the Supreme Court in compensation for VRS (voluntary retirement scheme) liabilities."
In addition, the government will also pay the outstanding interest on the bank loans for the financial year 2015-16 amounting to approximately Rs.44 crore.
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