The Union Cabinet on Wednesday approved the closure of loss-making public sector enterprise Hindustan Cables Limited (HCL) and infusion of Rs 4,777.05 crore towards payment of salaries and conversion of loan into equity etc.
"The Union Cabinet, under the chairmanship of Prime Minister Narendra Modi, has given its approval for the closure of Hindustan Cables Limited, Kolkata, as per the provisions of the Companies Act, Industrial Disputes and other relevant Acts," a Finance Ministry statement said.
"Total cash infusion for the company's closure will be Rs 1,309.90 crore and non-cash infusion of Rs 3,467.15 crore in the form of conversion into equity of government's outstanding loan (including interest) as on September 30," the statement said.
The employees will be offered Voluntary Retirement Scheme (VRS) and Voluntary Separation Scheme (VSS) packages at national 2007 and other employees-related liabilities, including payment of salary and wages from April 2015 till they are separated from the company, it said.
The disposal of company assets will be as per the guidelines of Department of Public Enterprises on time-bound closure of loss-making central public sector enterprises and disposal of movable and immovable assets.
Secured creditors of HCL, led by the State Bank of India, had gone for one-time settlement, which includes waiver of interest, and agreed on the principal amount of Rs 305.63 crore.
The company was set up for the manufacture of telecom cables to cater to the needs of the then government-owned telecom sector in the country.
Due to rapid change in telecommunication technology (to wireless), the demand for telecom cables, however, reduced drastically by the turn of the century.
Several attempts were made by the Department of Heavy Industries to revive HCL but it failed. Attempts to transfer HCL units to the Department of Defence Production of the Ministry of Defence also did not yield results.