The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, on 17 May 2017 approved a restructuring plan for Hindustan Organic Chemicals Ltd (HOCL).
This came following the observation that Hindustan Organic Chemicals Ltd became a more of a loss making and sick Central Public Sector Enterprise (CPSE) under the Department of Chemicals & Petrochemicals.
The company has been making continuous cash losses since 2011-12 resulting in acute shortage of working capital. It had not been paying regular salary and statutory dues to the employees since February 2015. Most of its plants have remained shut down during the last few years.
The company have its units at Rasayani (Maharashtra) and Kochi (Kerala).
Restructuring Plan for Hindustan Organic Chemicals Ltd (HOCL)
• The restructuring plan involves closing down the operations of all the non-viable plants at Rasayani unit of HOCL except Di-Nitrogen Tetroxide (N2O4) plant which is to be transferred to ISRO.
• The plant will be transferred to ISRO on 'as is where is' basis, with about 20 acres of land and employees associated with the plant.
• The N2O4 plant is of strategic importance as it is the only indigenous source of N2O4 which is used as liquid rocket propellant by ISRO in the space launch vehicles.
Financial implications of Restructuring Plan
The restructuring of HOCL will have a financial implication of Rs 1008.67 crore, which will be met partly from sale of 442 acres HOCL land at Rasayani to Bharat Petroleum Corporation Ltd for Rs 618.80 crore and the balance Rs 365.26 crore will be taken as a bridge loan from the Union Government.
The funds will be used to liquidate the various liabilities of the company, including payment of outstanding salary and statutory dues of employees and repayment of guaranteed bonds of Rs 250 crore due for redemption in August-September 2017.
The bridge loan amount is proposed to be repaid to the government from the disposal of remaining unencumbered land and other assets of Rasayani unit.
The restructuring plan will enable HOCL to close down the operations of non-viable plants at Rasayani unit while transferring the strategically important N2O4 plant to ISRO to ensure continuity of manufacture and supply of N2O4 for ISRO's space programme.
Interest and welfare of employees will be addressed by payment of all their outstanding salary dues. Disposal of land assets, initially through sale of 442 acres to BPCL and subsequently of the remaining unencumbered land, will unlock the land assets for being redeployed for economically productive investments.
If all this happens as planned, the Hindustan Organic Chemicals Ltd may witness the recovery.
What: Approved by CCEA
When: 17 May 2017