End of the line for Bharat Wagon

Railways may move Cabinet to shut the PSU in 3 months

Bharat Wagon & Engineering Co (BWEL), created in 1978 after takeover of two private companies, is on the way to be shut down. Indian Railways (IR) is likely to move a Cabinet note to have it closed in three months
"For the past one year or so, employees were on strike here. They might get a higher compensation than under the voluntary retirement scheme," said an official source.
 
In September 2016, the Cabinet Committee on Economic Affairs had given its approval for initiating the process of winding-up of Hindustan Diamond Co, an equal joint venture of the Union government and De Beers Centenary Mauritius. In December, it had cleared the closure of Indian Drugs & Pharmaceuticals and of Rajasthan Drugs and Pharmaceuticals, after selling off their land.
 
A similar strategy is likely for BWEL. The company's freehold land parcels of about 19.6 acres might be first offered to the government or be auctioned, the official added.
 
BWEL was on the list prepared last year by NITI Aayog of 17 loss-making government companies proposed to be shut down. The company used to make rail wagons but suffered heavy losses when their prices dropped in 2013. It was focusing on maintenance work.
 

A case in point

BWEL

• It was incorporated in 1978 by taking over two sick private wagon making firms
• Third manufacturing unit was added in 1983-84
• In 1986, it became a subsidiary of Bharat Bhari Udyog Nigam
• In 2008, administrative control was transferred to Ministry of Railways
• BWEL was on the list of 17 loss-making govt companies the NITI Aayog proposed to shut down in 2016

It was incorporated in December 1978 by taking over of two sick private wagon making companies, Arthur Butler & Co, Muzaffarpur, and Britannia Engineering  (Wagon Division), Mokama, both in Bihar. A third manufacturing unit was added to the company in 1983-84, at the industrial estate at Bela, Muzaffarpur (Bihar) for manufacture of LPG cylinders. The company was under the department of heavy industry and became a subsidiary of Bharat Bhari Udyog Nigam in 1986, before the railways ministry took it under when Laloo Prasad, former chief minister of Bihar, was Union minister in charge of the latter.
 
"It was a political move to acquire this company, since Prasad was the minister and the company was situated in Bihar. The railway takeover happened after financial restructuring but a lot of capital was needed to revive these units," said a former board member of IR.
 
The company had asked the ministry for Rs 43.6 crore of capital infusion in December 2011. They got it but in four instalments. It now has a little more than 700 employees.
 
Managing Director M K Roy could not be reached, despite repeated attempts.
 
The closure comes when the IR is pushing for a holding company for the 13 public sector units under them. Apart from BWEL, there are Container Corporation, Ircon, IRCTC, Konkan Railway Corporation, Mumbai Railway Vikas Corporation, Rail Vikas Nigam, Railtel Corporation, RITES, Dedicated Freight Corridor Corporation, Burn Standard, Braithwaite & Co and Kolkata Metro Rail Corporation.
 
The ministry of finance, however, is not in favour of such a structure, since proceeds from sale of stake in these subsidiaries will go to the holding company and not the government. It has instead mooted the listing of IRCTC, Ircon and the railway finance corporation.