Financial restructuring of Mineral Exploration Corporation

New Delhi, July 27 (UNI) The Union Cabinet today approved the financial restructuring of the Mineral Exploration Corporation Ltd (MECL), allowing increase of authorised capital from Rs 100 crore to Rs 125 crore, wage revision of employees and waiver of interest of about Rs 59 crore.

Announcing the decision after the Cabinet meeting, Information and Broadcasting Minister Priya Ranjan Dasmunsi said interest of Rs 51.56 crore and penal interest of Rs 7.28 crore as on March 31, 2005 would be waived. No interest would be levied beyond that date.

The Cabinet also approved conversion of outstanding Government loan of Rs 30.80 crore into equity and also similar conversion of Non-plan loan of Rs 15 crore into equity effective from March 31, 2005, thus raising the paid up Capital from Rs 73.75 crore to Rs 119.55 crore.

It also allowed wage revision of employees to be effective from April 1, 2003 and to be implemented w.e.f. April 1, 2006.

Arrears of wage revision for 2005-2006 will be paid in 2006-07 subject to achieving a gross profit (gross margin less depreciation and deferred revenue expenditure) of Rs 15.64 crore in 2005-06.

With regard to the payment of arrears of wage revision for the balance period of 2003-04 and 2004-05, the Government will review physical and financial performance of MECL and will permit the company to pay the same in 2007-08, from its internal resources, subject to achievement of physical and financial projections and availability of sufficient cash to meet the liability.

Mr Dasmunsi said the decision will help the company achieve a turn-around and it is not likely to depend on further budgetary support from the Government.

It would give healthy look to the Balance Sheet of the Company and will thereby increase the loan-raising capacity and investment capacity of the company. It will enable technological upgradation and capacity expansion for meeting contractual and promotional exploration demand.

The decision on wage revision will reduce financial hardship to motivate the moral of employees and will also help retaining experienced employees.

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