CIL, DVC, BEML to invest Rs1000cr for MAMC revival

Coal India (CIL), DVC and BEML will be investing around Rs 1000 crore in phases to revive the West Bengal-based Mining and Allied Machineries Corporation (MAMC), a BIFR company since 2003.

While BEML will be the major share holder with 48 per cent, CIL and DVC will be picking up 26 per cent stake each in the company. A revived MAMC is expected to commence operation from the middle of 2010.

CIL chairman Partha S Bhattacharya said, " I have approached the coal secretary H C Gupta to take up the matter with the ministry for a cabinet clearance on the takeover. Prior to that the clearance for the joint take over will have to come from the Calcutta High Court as it is a BIFR company and the court is sole custodian to determine the company’s future".

MAMC has dues of Rs 1200 crore with the Centre and about Rs 100 crore with the West Bengal government. Bhattacharya said, " I approached the West Bengal government for a waiver and they have readily agreed. The green signal for the central waiver is still awaited and for this cabinet clearance is mandatory".

The waivers are critical for the revival of MAMC.

A silver lining recently emerged on the future revival of the company with the State Bank of India ( SBI) deciding to prune the debt component of the company from Rs 430 crore to Rs 120 crore. Bhattacharya said, " SBI ends have been tied up and things are moving in the right direction".

Revival of MAMC is essential for CIL as it is moving ahead in augmenting underground ( UG) mining production in the next couple of years. The coal giant is also seeking overseas tie-ups in Australia, China, Indonesia and USA for developing UG mining in the country.

UG mining comprise a meagre 20 per cent of its overall production. CIL plans to increase its current UG production from 44 million tonnes to 75 million tonnes in the next two years. A revived MAMC will be used by CIL to source UG mining equipment.

CIL has 318 UG mines of which 80 per cent are loss making. It accounts for an annual loss of Rs 3084 crore. There, however, are plans of setting up new UG mines having capacities between 2-5 million tonnes investing Rs 300 crore for each mine.