SCCL Financial Restructuring, Seeks Loan

The Singareni Collieries Company Ltd (SCCL) is raising Rs 600 crores from banks and financial institutions to retire costly government loans and pay wage arrears to its employees, and is on a financial restructuring exercise to boost bottomline.

The company has already raised bulk of the funds to the tune of Rs 400 crores from ICICI Ltd, and is in the process of raising another Rs 100 crores from the State Bank of India, and Rs 50 crores each from Stanchart and Indian Bank, Mr APVN Sharma, CMD, told ET.

"The loans are being raised by pledging bonds that the company owns. After the loan raising exercise is through in October, the company will still have retained Rs 300 crores worth bonds," said Mr A Venkateshwar, Director (Finance).

The company has paid wage arrears worth Rs 260 crores, 60 per cent of the total arrears, under the agreement reached by the state government with the employees in June this year, against the 16 August deadline.

"This is the single largest disbursement of arrears by a company over a period of three days, to over 1 lakh employees," said Mr Venkateshwar. The company is also clearing the entire government loans to the tune of Rs 390 crores. "With the repayment of the costly government loans, the interest burden on the operating costs has reduced from Rs 33 per tonne last year to just one rupee per tonne currently," the director said.

SCCL has also initiated a major financial restructuring exercise, through fuel supply agreements (FSA) with client companies, to boost bottomline.

The company has begun a 10-day billing cycle for supply of coal to three major customers -- APGENCO for 7.5 million tonnes per year, Maharashtra State Electricity Board (MSEB) for 2.5 million tonnes per year, and the Karnataka Power Corporation for 3 million tonnes per annum.

However, the company is in the process of entering into an agreement for a daily billing cycle with its largest customer Ramagundam power project of NTPC Ltd, for supplying 10 million tonnes per annum.

APGENCO is expected to clear its dues of Rs 250 plus crores in a month's time, while MSEB is expected to follow suit with its Rs 30-40 crores dues, the director said.

The company, which achieved turnaround four years ago, from a stage of being referred to BIFR, has posted profits of Rs 302 crores in 1999-2000, Rs 89 crores last year (because of provision for wage arrears which total Rs 540 crores), expects net profit of Rs 270 - 280 crores this year.

SCCL is working out modalities for a VRS package, which will be ready in three months, the director said. "We are looking at becoming competitive by becoming machine mining intensive, rather than labour intensive, and cut down manpower in categories of hand mining and surface workers as well," he said.