Setting aside a proposal for waiver, Coal India Ltd. (CIL) has decided to convert Rs.2,539 crore of loans and current account balance of its subsidiary Bharat Coking Coal Ltd. (BCCL) into non-convertible cumulative preference shares.
The move will help BCCL to turn net-worth positive without impacting the bottomline of CIL, which is now a listed company. The waiver proposal was part of the Board for Industrial and Financial Reconstruction (BIFR) package, it was learnt. This decision was taken at a CIL board meeting on Monday. The company said, in a filing to the exchanges, that the conversion to 5 per cent non-cumulative preference shares was recommended by its audit committee and approved by the board.
Board members felt that since BCCL had been making profits (since 2006) there was no point in giving it a waiver, which would impact CIL’s bottomline.
BCCL, the only coking coal miner in the CIL stable, is likely to close this fiscal with a profit of Rs.2,000 crore. BCCL said that its production was on a steady rise since the initiation of its revival process. Production is set to increase to 34 million tonnes next fiscal from 22.31 million tonnes in 2004-05.