Cabinet approves Rs 93cr Mecon revival plan

New Delhi, Feb 8 (UNI) The Union Cabinet today gave its approval for the revival of public sector Mecon Ltd at an estimated cost of Rs 93 crore.

Briefing reporters after a cabinet meeting Finance Minister P Chidambaram said the plan would be carried out in two phases.

A sum of Rs 22 crore as fresh cash infusion as equity will be provided to the company for payment of Rs 10 crore to Rites Ltd for office space acquired, augmentation of the office space in Bangalore (Rs six crore) and meeting part payment of wage arrears (Rs six crore). Rs eight crore have already been provided to the company in budgetary expenditure of 2006-07.

There will be fresh infusion of funds in the current fiscal by way of five per cent Non-Cumulative Redeemable Performance Share Capital aggregating to Rs 17 crore. The shares are repayable in five equal annual instalments commencing from 2011-12. About Rs 15 crore assistance has been allocated towards payment of statutory dues and Rs 31 crore for meeting the balance wage arrears.

The minister said that the 50 per cent interest subsidy (not exceeding Rs 6.50 crore per annum) on VRS loans will be phased out by 2013-14.

The government's loan and interest outstanding as on March 31, 2005 amounting to Rs 7.72 crore will be converted into equity.

The package also includes waiver of guarantee fee, not exceeding Rs 1.92 crore per annum, on VRS loans.

The retirement age of the employees has been enhanced to 60 years from 58 years.

Mr Chidambaram said the package will provide to the company working capital, besides reducing its current liabilities and borrowings and containing interest charges.

It will improve networth of the company and thereby ensuring further business opportunities, he added.

It will provide financial relief to the company and subsidise the cost of manpower restructuring taken up by the company, he said.

Additionally, it will also assure returns to the government as dividend.

UNI