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Cabinet nod for HEC revival plan

A view of Heavy Engineering Corporation, Ranchi, Jharkhand.

NEW DELHI: Pitching for the revival of public sector units, the Union Cabinet has given its approval to the multi-crore financial revival package for the Ranchi-based public sector firm Heavy Engineering Corporation (HEC).

In order to give a boost to the company’s output and turn it around, HEC would form a joint venture company with Bharat Heavy Electricals Limited (BHEL) to manufacture castings and forgings required by the two units of HEC — heavy machine building plant and heavy machine tools plant.

The financial package approved by the Cabinet Committee on Economic Affairs (CCEA) headed by the Prime Minister, Manmohan Singh, includes a loan of Rs. 60 crore at normal rate of interest to the company, wage revision of employees, enhancing retirement age to 60 years and waiver of interest and penal interest amounting to Rs. 37.91 crore on CISF over the years, according to the Minister of State for Power, Jairam Ramesh. He said HEC had been sick for a long time but started earning profit from 2006-07. The company is engaged in manufacturing engineering equipment, machine tools and spares for industries. The company would receive Rs. 250 crore from the State Government with no future commitment for transfer of additional land or buildings.

The Cabinet has also approved the proposal to convert into equity Government’s loan of about Rs. 108 crore to HEC and outstanding interest amounting to Rs. 56.48 crore. It has also decided to restore the enhanced guarantee of Rs. 253 crore at original level in place of the present Rs. 150 crore till March 31, 2011, without charging any guarantee fee.

The Cabinet also gave its approval to accept the proposal of the Jharkhand Government to transfer 2,342 acres, 17 buildings and 1,155 residential quarters along with land valuing Rs. 142.33 crore to the State. “With the approval of the revival package, profitability would be sustained and the company would be able to execute long pending orders and move forward toward better performance,” Mr. Jairam Ramesh said.

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