Cabinet approves closure of Hindustan Cables Limited
28 Sep 2016
The union cabinet headed by Prime Minister Narendra Modi has given its approval for closure of Hindustan Cables Limited (HCL), Kolkata as per the provisions of the Companies Act, 1956/2013, Industrial Disputes Act, 1947 and other relevant Acts.
The employees will be offered attractive VRS/ VSS package at notional 2007 pay scales and other employees' related liabilities, including payment of salary and wages from April 2015 till they are separated from the company on VRS/VSS.
The company's assets will be disposed of in terms of the guidelines of Department of Public Enterprises on time bound closure of sick / loss making central public sector enterprises (CPSEs) and disposal of movable and immovable assets.
Total cash infusion for closure of company will be Rs1,309.90 crore and non-cash infusion of Rs3,467.15 crore in the form of conversion into equity of government of India's loan (including interest) outstanding as on 30 September 2016.
Secured creditors of HCL, Kolkata, led by SBI as consortium lenders to the company, have been generous in their support. The One Time Settlement (OTS) terms include complete waiver of interest and principal amount of Rs305.63 crore in settlement of all pari-passu collateral held by them.
There is no production activity in the company since January 2003. The employees of the company are in 1997 pay scales. Due to non-payment of salary and wages, it is very difficult for the employees to survive and meet their immediate financial obligations.
With the VRS / VSS package and clearance of other outstanding liabilities, the employees will come out of their present financial crisis. It will also help the employees in their post retirement rehabilitation. With the present time bound closure of the company, the valuable assets of the company will be available for other optimum utilisation, an official release stated.
HCL, established in 1952, had four manufacturing units at Rupnarainpur (West Bengal), Hyderabad (Telengana), Naini (UP) and Narendrapur (West Bengal). With registered office at Kolkata, HCL was set up to cater to the needs of government-owned telecom companies BSNL and MTNL for manufacture of telecom cables. Due to rapid change in telecommunication technology (wire-line to wireless), the demand for telecom cables has been drastically reduced.
The government also claims that the department of heavy industries has made several attempts for revival of the company but failed. Attempts to transfer HCL units to the ministry of defence/department of defence production also did not yield results. The proposal for closure of the company has been made as per the recommendations of BIFR, BRPSE and the roadmap approved by CCEA on 29 December 2014 for phasing out non-plan budgetary support to sick CPSEs.
The company is a BIFR referred company since 2002.