The Cabinet today approved the restructuring of Bird Group of Companies (BGC) under Ministry of Steel. The restructuring proposal envisages converting companies under BGC into Government companies / PSUs and vesting their management control of RINL in a subsidiary cum holding structure in order to make these companies economically viable and sustainable. The government loan and accrued interest thereon would be waived off. The commercially unviable companies would be wound up and their employees will be adjusted in other sister companies under the Group or would be offered VRS. The restructuring proposal is mutually beneficial to both RINL and BGC.
Point-wise details - The brief of the restructuring proposal is as under: (i) Orissa Minerals Development Company Limited (OMDC) and Bisra Stone Lime Company Limited (BSLC) will be made subsidiary Companies of Eastern Investment Limited (EIL).
(ii) EIL will be made a subsidiary of RINL thus bringing EIL, OMDC and BSLC under the umbrella of RINL.
(iii) Winding up of Karanpura Development Company Limited (KDCL) and Scott & Saxby Limited (SSL). The employees will be adjusted in OMDC / BSLC or will be offered VRS.
(iv) Conversion of principal amount of government loan (Rs.86.79 crore) given to BSLC into equity and waiver of outstanding interest accrued thereon (Rs.624.20 crore as on 31.3.2009).
(v) Write off of the principal amount of loan given to KDCL and its subsidiary SSL (Rs. 8.06 crore) along with outstanding interest accrued thereon (Rs. 96.43 crore as on 31.3.2009).
Background:
There are five operational companies under BGC namely EIL, OMDC, BSLC, KDCL and SSL. The companies under BGC are age old companies and Government of India acquired shares in the above companies by virtue of an Ordinance and later an Act called ‘The Bird and Company Limited (Acquisition and Transfer of Undertaking and Other Properties) Act, 1980’ and their administrative control were vested in the Ministry of Steel. These Companies are in the nature of Government managed Companies.
EIL is an investment company having major shareholding stake in the three mining companies under the group namely OMDC, BSLC and KDCL. OMDC and BSLC posses significant assets in terms of operation of mining leases of iron ore, manganese ore, limestone and dolomite, which are essential raw material for the steel companies. SSL, a wholly owned subsidiary of KDCL is engaged in sinking of deep tube wells and mineral exploration activities.
At the time, the Companies under the banner of Bird Group came under the administrative control of the Ministry of Steel, Government of India, all the Companies were in adverse financial position and not doing well commercially. The Government has been supporting these companies with the financial support from time to time for resolving outstanding issues such as rationalization of excessive manpower, erosion of working capital and wage liabilities. However, the performances of these companies except OMDC have not shown desired improvement. These companies continued suffering with the problems of weak financials, weak management structure, practices and control, lack of proper utilization of available resources, etc., which necessitated for restructuring of these companies to make them commercially viable and sustainable.
Major Impact -
The restructuring of BGC and their association with RINL, will be mutually beneficial as this would address the need of raw material security for RINL and BGC have the benefit of organization culture, technology and managerial expertise available in RINL and access to the much needed capital for value addition projects and for optimizing their production and productivity.
The restructuring is further intended to consolidate EIL, OMDC and BSLC into government Companies / PSUs in a subsidiary structure in order to strengthen their management, oversight over these companies (through regular audits) and subject them to general rules and guidelines of Department of Public Enterprises (DPE). Manpower planning and resource utilization in these companies will be streamlined for greater transparency and public accountability.
Implementation Strategy and targets:
The process for restructuring will be initiated immediately. Concerned Ministries / Departments and SEBI will be approached for necessary approvals involved in the process of restructuring.
Expenditure involved:
There is no cash infusion on part of the Government of India in converting OMDC and BSLC into subsidiary of EIL and on making EIL (and also OMDC and BSLC) a subsidiary of RINL.
No. of beneficiaries -
Restructuring would help OMDC and BSLC financially grow, benefiting their employees besides helping economic development of the region including peripheral economy surrounding mine leaseholds. Restructuring would also help RINL setting up downstream projects / value addition plants adding to employment generation and development of the region.
States / Districts covered:
Keojhar and Sundergarh Districts of Orissa where OMDC and BSLC operate their mining leaseholds.
Point-wise details - The brief of the restructuring proposal is as under: (i) Orissa Minerals Development Company Limited (OMDC) and Bisra Stone Lime Company Limited (BSLC) will be made subsidiary Companies of Eastern Investment Limited (EIL).
(ii) EIL will be made a subsidiary of RINL thus bringing EIL, OMDC and BSLC under the umbrella of RINL.
(iii) Winding up of Karanpura Development Company Limited (KDCL) and Scott & Saxby Limited (SSL). The employees will be adjusted in OMDC / BSLC or will be offered VRS.
(iv) Conversion of principal amount of government loan (Rs.86.79 crore) given to BSLC into equity and waiver of outstanding interest accrued thereon (Rs.624.20 crore as on 31.3.2009).
(v) Write off of the principal amount of loan given to KDCL and its subsidiary SSL (Rs. 8.06 crore) along with outstanding interest accrued thereon (Rs. 96.43 crore as on 31.3.2009).
Background:
There are five operational companies under BGC namely EIL, OMDC, BSLC, KDCL and SSL. The companies under BGC are age old companies and Government of India acquired shares in the above companies by virtue of an Ordinance and later an Act called ‘The Bird and Company Limited (Acquisition and Transfer of Undertaking and Other Properties) Act, 1980’ and their administrative control were vested in the Ministry of Steel. These Companies are in the nature of Government managed Companies.
EIL is an investment company having major shareholding stake in the three mining companies under the group namely OMDC, BSLC and KDCL. OMDC and BSLC posses significant assets in terms of operation of mining leases of iron ore, manganese ore, limestone and dolomite, which are essential raw material for the steel companies. SSL, a wholly owned subsidiary of KDCL is engaged in sinking of deep tube wells and mineral exploration activities.
At the time, the Companies under the banner of Bird Group came under the administrative control of the Ministry of Steel, Government of India, all the Companies were in adverse financial position and not doing well commercially. The Government has been supporting these companies with the financial support from time to time for resolving outstanding issues such as rationalization of excessive manpower, erosion of working capital and wage liabilities. However, the performances of these companies except OMDC have not shown desired improvement. These companies continued suffering with the problems of weak financials, weak management structure, practices and control, lack of proper utilization of available resources, etc., which necessitated for restructuring of these companies to make them commercially viable and sustainable.
Major Impact -
The restructuring of BGC and their association with RINL, will be mutually beneficial as this would address the need of raw material security for RINL and BGC have the benefit of organization culture, technology and managerial expertise available in RINL and access to the much needed capital for value addition projects and for optimizing their production and productivity.
The restructuring is further intended to consolidate EIL, OMDC and BSLC into government Companies / PSUs in a subsidiary structure in order to strengthen their management, oversight over these companies (through regular audits) and subject them to general rules and guidelines of Department of Public Enterprises (DPE). Manpower planning and resource utilization in these companies will be streamlined for greater transparency and public accountability.
Implementation Strategy and targets:
The process for restructuring will be initiated immediately. Concerned Ministries / Departments and SEBI will be approached for necessary approvals involved in the process of restructuring.
Expenditure involved:
There is no cash infusion on part of the Government of India in converting OMDC and BSLC into subsidiary of EIL and on making EIL (and also OMDC and BSLC) a subsidiary of RINL.
No. of beneficiaries -
Restructuring would help OMDC and BSLC financially grow, benefiting their employees besides helping economic development of the region including peripheral economy surrounding mine leaseholds. Restructuring would also help RINL setting up downstream projects / value addition plants adding to employment generation and development of the region.
States / Districts covered:
Keojhar and Sundergarh Districts of Orissa where OMDC and BSLC operate their mining leaseholds.
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