State-owned wagon maker Burn Standard is planning to put up its land on sale to pay off about Rs 100 crore dues to creditors of about Rs 100 crore as the last ditch attempt to get out of bankruptcy proceedings.
Burn Standard has lands valued at about Rs 750 crore in its possession, two persons familiar with the development told ET.
The company is also looking to raise about Rs 100 crore immediately either from United Bank of IndiaBSE 0.54 % or the Ministry of Railways as working capital as well as to expedite clearing of the dues since selling of land may take long.
These are in a nutshell the most significant aspects of the company’s resolution plan, which is being finalised now for submission before the bankruptcy court, the persons mentioned above said.
The company with Rs 290 crore of accumulated loss and Rs 107 crore negative net worth has to complete the insolvency resolution process by February 24, which is the extended deadline given by National Company Law Tribunal’s Kolkata bench. If it fails to do so, it will face liquidation as a rule, making 500-odd people including 50 officers jobless at one go.
Resolution professional Partha Kamal Sen refused comment on the development.
“We expect a successful resolution exercise as we have land to back our plans,” a company official said.
There is a catch though. Even if the resolution plan goes through, the survival of the century-old company is still in doubt as the Niti Aayog is learnt to have recommended the closure of the company, which is way far behind rivals with no investments in years in technology and faces high overhead costs.
“We are keeping our fingers crossed. If we survive, wagon repairing and shipbuilding can be the areas where we can do well and earn about 15% margin” the official said.
The company, which saw failure of successive revival plans over the last two decades, made 680 wagons and repaired 3,700 this fiscal till December amid adversities. It recorded net sales of Rs 197 crore for the first nine months of the fiscal, compared with Rs 195 crore it did last fiscal, despite the scaling down of the foundry operation at Howrah. The company has two engineering units at Howrah and Burnpur.
