Centre on Wednesday approved Rs 4,777.05 crore package for closure of state-run Hindustan Cables Ltd, which would be used for paying wages, offering early retirement schemes and converting government loan into equity.
"Union Cabinet under chairmanship of 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," a statement said.
According to the statement, the employees will be offered attractive VRS/VSS package at notional 2007 pay scales.
The disposal of assets of the company, it added, will be as per the Department of Public Enterprises guidelines with regard to time-bound closure of sick/loss making Central Public Sector Enterprises (CPSEs).
There will be cash infusion of Rs 1,309.90 crore and non-cash infusion of Rs 3,467.15 crore in the company. The non-cash portion will be used for conversion into equity of centre's outstanding loan (including interest) as on September 30, 2016.
Secured creditors of HCL, led by SBI as consortium lenders had gone in for One Time Settlement (OTS) of dues which include complete waiver of interest and settlement of principal amount of Rs 305.63 crore.
There is no production activity in the company since January 2003. The employees of the company are in 1997 pay scales.
HCL was established in 1952. It had four manufacturing units at Rupnarainpur and Narendrapur (West Bengal), Hyderabad (Telangana) and Naini (UP).
It 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.
Several attempts were made by Department of Heavy Industries for revival of the company but failed. Attempts to transfer HCL units to Ministry of Defence/Department of Defence Production also did not yield results.