New Delhi: The Steel Ministry has turned down the proposals of the Planning Commission to either hand over Hindustan Steelworks Construction Ltd (HSCL) to SAIL or shut down the Kolkata-based company if its financial restructuring is not possible.

The apex planning body wrote in a letter to the Steel Ministry on January 16 contending that since there was no credible plan to suggest that HSCL's performance would be better than in the past, it was "a fit case for closure".

"Alternatively, the Ministry should let SAIL take over HSCL along with accumulated liabilities," Planning Commission had suggested.

Not in favour of closing down the Kolkata-based HSCL, the Steel Minister Beni Prasad Verma replied that both the options were not workable.

This is because SAIL was not interested in acquiring the firm, which is in the business of construction of steel plants and building of infrastructure while the closure was not feasible as this would cost the government around Rs 1,900 crore.

In a letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, Verma wrote: "The Ministry had consulted the Chairman of SAIL on the views of the Planning Commission as to if it should let SAIL take over HSCL along with accumulated liabilities. SAIL has examined the matter in detail and has informed they are not in a position to takeover HSCL".

Verma said the restructuring plan of HSCL was finalised on the basis of a report by A F Ferguson in consultation with Board for Reconstruction of Public Sector Enterprises (BRPSE) and other ministries including the finance ministry and added that the performance of the company over the last five years has been better than expectations.

"At present, it has a work order of about Rs 4,100 crore and it is in a transition phase. During 2011-12, the company achieved Rs 1,200 crore turnover with an operational profit of about Rs 73 crore," Verma wrote in the letter, dated May 2.

HSCL's turnover, order book and operational profit grew by a compounded annual growth rate of 22.8 per cent, 28.08 per cent and 15.5 per cent respectively over the last six years.

"HSCL needs to be supported by way of the proposed restructuring proposals, which do not require any cash infusion from government to achieve self-sustainable status. It may not be feasible to take a decision regarding closure of the company at present," Verma said.

On the other hand, he said, closure of the company would cost about Rs 1,895.31 crore to the government and the entire cost would have to be paid in the current year itself.

HSCL had earlier said that following the restructuring, the turnover of the company is expected to go up to Rs 2,400 crore by 2020 from Rs 1,000 crore recorded in the last fiscal.

Its paid-up share capital would also rise to Rs 700 crore from Rs 171 crore now, it had said.


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