The fate of the government-owned Burn Standard Company, one of the oldest wagon makers in India, still hangs in balance as the company received extension till February 24 for insolvency resolution even as it failed to submit a revival roadmap within the first 180 days under the new bankruptcy law.
A source close to the development told ET that an external consultant is preparing a resolution plan and it is expected to be ready by December.
The company, whose history dates back to 1781, has a debt about Rs 285 crore, which includes Rs 62 crore dues to operational creditors including suppliers and contractors. United Bank of India is the sole lender to the company. However, sources said that the actual dues of the company would be much higher if unpaid payment to employees is included.
The company was referred to the National Company Law Tribunal’s Kolkata bench in June and the stipulated first 180 days for resolution ended on November 27.
Partha Kamal Sen, resolution professional for Burn Standard, confirmed to ET that NCLT now extended the deadline till February 24.
The company has two engineering units at Howrah & Burnpur and one foundry unit at Howrah. It has some 513 employees.
They are a worried lot now as the company has just about two months to complete the debt resolution exercise. There raised concerns as to why the company, which itself went to NCLT for resolution, failed to submit a revival plan.
Incidentally, the company board had approved Rs 300 crore financial package including sale of land in September last year but it did not elicit any response from the ministry of railways, said Anutosh Bandyopadhyay, former general secretary of All India Federation of Burn Standard Officers’ Association.
The company came under the administrative control of ministry of railways from ministry of heavy industry in 2010 when Mamata Banerjee was the railway minister.
“The question remains as to how could the board of Burn Standard refer the company to NCLT without the approval from the ministry of railways,” the former union leader said. He further added: “Since the company was acquired under the Nationalisation Act 1976, it cannot be referred to NCLT without the approval of the Parliament.”
Burn & Company, which built iconic structures in Kolkata such as Shahid Minar and Belur Math, the headquarters of the Ramakrishna Mission, ventured into the field of railway engineering in 1950s. It was nationalized in 1976 and was amalgamated with Indian Standard Wagon Company (founded in 1918) and renamed as Burn Standard Company.
