HOCL gets more time to redeem Rs 270 cr shares issued to Govt

The company has gotten four extra years to redeem shares

The Centre has revised the revival package for the Hindustan Organic Chemicals Ltd (HOCL) and decided to give an extra four years upto 2015-16 fiscal to redeem shares worth Rs 270 crore issued to the government.

 

As part of the revival package for HOCL approved in 2006, it was to redeem 27 crore shares given to the government in 2011-12 fiscal. Since the company's financial position has not been encouraging, the government has decided to tweak terms and conditions of revival package to help HOCL.

 

The decision in this regard was taken in the meeting of the Cabinet Committee on Economic Affairs (CCEA) yesterday.

 

"CCEA has approved the proposal of the Ministry of Chemicals and Fertilisers to revise the terms and conditions of the revival package, approved in 2006, for the Hindustan Organic Chemicals Limited (HOCL)," the statement said.

 

These measures are expected to help HOCL in its revival effort in the short term, it added.

 

According to the revised revival package, HOCL has been given more time to redeem shares worth Rs 270 crore issued to the government, in the 2015-16 fiscal in four equal instalments of 25% each.

 

That apart, the government guarantee for Rs 100 crore has also been extended for five years upto August 28, 2017. The guarantee would continue to remain valid even on referral of HOCL to the Board for Industrial and Financial Reconstruction (BIFR) as sick company.

 

HOCL has two units at Rasayani in Maharashtra and Kochi in Kerala. It manufactures phenol, acetone, formaldehyde, nitrobenzene, aniline, nitro toluene and hydrogen peroxide, among other items.

 

The company, due to continuous losses, was registered with the BIFR as a sick company in January 2005. Subsequently, a rehabilitation proposal was approved and implemented by the Government during 2006-07.

 

As a result of the implementation of the rehabilitation package, the company made a profit of Rs. 17.04 crore during 2006-07 and Rs 13.61 crore in 2007-08 and came out of the BIFR in May, 2008.

 

However, thereafter, the financial position of HOCL has not been encouraging over the years except for 2010-11 when it made a profit of Rs 25.72 crore

 

The company suffered a loss of Rs. 137.43 crore during 2012-13 fiscal. As on 31.03.2013, HOCL has an accumulated loss of Rs. 528.27 crore, and as a result, the net worth has eroded to minus Rs. 128.50 crore.