Burn Standard looks at monetising land to escape liquidation

Government-owned Burn Standard Company, officially a “sick company” since January 1995 and now facing insolvency resolution at the Bench here of the National Company Law Tribunal (NCLT), is banking on monetising of land to avoid liquidation.

The company was referred to the NCLT by its board of directors after the Sick Industrial Companies (Special Provisions) Act, 1985, was repealed in 2016. Sources said the company (which traces its foundation to 1781, and now makes railway wagons; it is under the Ministry of Railways) had nearly 422 acres, valued at ~8 billion in West Bengal, Jharkhand, Rajasthan, Tamil Nadu and other locations.

That is enough to pay all dues to its financial and operational creditors, as well as retired employees, and meets the need for ~1 billion as working capital. The accumulated debt is ~2.85 billion.

However, book-keeping hasn't been consistent and most of the land has been encroached upon. Company officials are in talks with the respective state governments on this.

The Resolution Professional (RP), who has been appointed, must present a revival plan for the committee of creditors' approval. This has to be done within a week.

United Bank of India (UBI) is its sole financial lender. Apart from this, there are 196 operational creditors, and the consolidated exposure is ~620 million.

Anutosh Bandyopadhyay, former general secretary of the All India Federation of Burn Standard Officers' Association, said dues to retired employees were ~3-3.5 billion. “UBI is also not keen to seek liquidation but wants the company to pay its dues. The bank, until now, has not marked us as a non-performing asset," the official said.