Eastern Coalfields Likely To Be Referred To Bifr
Eastern Coalfields Ltd (ECL), a Coal India subsidiary, is likely to be referred to the Board for Industrial and Financial Reconstruction (BIFR) following the erosion of its net worth. Coal India, in the meantime, has decided to stop extending loan to ECL.
Eastern Coalfields, which owns 124 mines including some of the oldest in the country, would thus become the second coal company in the country to follow the BIFR route after Bharat Coking Coal Ltd (BCCL) which become a BIFR case on November 24, 1995. Incidentally, BCCL has not been able to meet the commitments it had made in the revival package submitted to BIFR.
While Eastern Coalfields is certain to come under the BIFR spell due to heavy losses suffered in the fiscal 1996-97, three other subsidiaries of Coal India have also had a bad spell in the year under review.
Provisional figures for 1996-97 show that the four Coal India subsidiaries suffered a total loss of Rs 1,095 crore. Of these, ECLs loss was put at Rs 500 crore, BCCLs at Rs 524 crore, Central Coalfields (CCL) at Rs 30 crore and North Eastern Coalfileds at Rs 41 crore.
Since ECLs loss in 1996-97 was heavy despite a price increase of 23-34 per cent in the A,B,C,C and D grades coal and increase of Rs 143 for Rajmahal coal, both Coal India and ECL are now reconciled to the fact that the BIFR course is inescapable for the company.
The A,B,C and D grades of coal constitute 55 per cent of the total production at Eastern Coalfields. Rajmahal coal price was hiked to as much as 53 per cent and the yield from this coaliery is 33 per cent of the total production at ECL.
The irony is that in five years up to 1995-96, investments in ECL, BCCL and CCL has been Rs 4,241 crore which is 52 per cent of Coal Indias total investment of Rs 8,065 crore. Against this, aggregate increase in production in this period in the three companies is only 6 million tonnes against 42 million tonnes in other Coal India subsidiaries.
In these five years, the operating losses of ECL and BCCL have been increasing. CCL is showing loss since 1994-95. The operating losses of ECL up to 1995-96 is Rs 2,125 crore, while that of BCCL is Rs 1,869 crore. CCLs operating losses for 1994-95 and 1995-96 stands at Rs 338 crore.
As per the 1996-97 provisional figures, the post-tax profit for Coal India is only Rs 200 crore. But the same year, Coal India had to pay Rs 337 crore to ECL and Rs 324 crore to BCCL. Besides, Coal India had to forgo about Rs 900 crore in loan repayment and interest payment due from these two companies and CCL.
Coal India has been resorting to heavy borrowing to finance the losses incurred by ECL and BCCL. But since these companies are unable to service the loan, it has decided to provide no further loan.
Rajmahal project posts Rs 60cr profit
CALCUTTA: The Rajmahal project of Eastern Coalfields ltd (ECL) has achieved a turnaround with a profit of Rs 60 crore during 1996-97 for the first time since its inception.
The project produced 10.03 million tonnes of coal during 1996-97 against the target of 9 million tonnes, registering a growth of 18 per cent in over the previous year, a ECL press release said yesterday.
The project has alsowon five awards for outstanding performance in 1996-97.