December 03, 2008

Ministry charts out restructuring plan for HEC

Union heavy industries ministry has come up with a detailed restructuring plan for Ranchi based Heavy Engineering Corporation Limited. The plan was envisaged during the maiden visit to the HEC by union heavy industries secretary Mr Satyanarayan Das. The details of the entire plan are presently being worked out by the HEC authorities and the union heavy industries ministry jointly.

The preliminary proposals forwarded by the ministry include enhancing the retirement age for below the board level employees of the company from 58 to 60 years. Since the order was more of an advisory nature, most profit making PSUs, particularly in the oil, coal and steel sectors had promptly hiked the retirement age of all employees.

However, in the case of HEC, though the retirement age for board level employees was raised from 58 to 60, the benefits were not allowed to percolate down to the employees as the company was incurring heavy losses and was put under the category of sick industries by the board for industrial & financial reconstruction.

Mr Das said that the union ministry has initiated a complete capital restructuring of HEC under which, the superannuation of all below the board level employees has been proposed to increase to 60 years from 58 years. He added that "HEC is now poised to record a net profit of at least INR 5 crore during the current financial year surpassing the turnover target of INR 360 crore fixed by the centre. By March 31st 2008 the actual turnover is expected to cross INR 450 crore. HEC is also on the brink of achieving a production target of INR 1000 crore during the coming financial year."

Another significant issue of the HEC restructuring plan includes a proposal to reduce interest rates on the bridge loan of INR 102 crore granted to the company by the centre to meet its working capital requirements and a provision of seeking advances from Steel Authority of India Limited, against work orders.

Mr Das said that "HEC has already grabbed more than INR 1400 crore of work orders from various plants of the SAIL during the past 1 month. A provision of advances from SAIL against existing work orders would help HEC get its much awaited relief by way of meeting working capital requirement and would help the company meet delivery schedules. A further incentive by way of a reduction in interest rates on the INR 102 crore bridge loan would help release precious funds for execution of work orders."

Mr Das also offered some goodies for HEC employees by revealing that the ministry has recommended implementation of the overdue 1997 wage revision agreement.