BCCL no longer sick after preferential shares issue to CIL

KOLKATA: Bharat Coking Coal's issue of preferential shares to parent Coal India has effectively taken it out of the purview of the Board for Industrial and Financial Reconstruction, which looks into rehabilitation of sick public sector companies.

Dhanbad-headquartered Bharat Coking Coal Ltd (BCCL), whose net worth was wiped out due to accumulated losses of about 5,600 crore till March 2012, saw it turn positive this month after Coal India infused 2,539 crore into the company against the non-convertible, redeemable, cumulative preference shares issued to it.

BCCL is the country's largest coking coal producer. It had been posting losses since its inception in 1972. It was referred to the BIFR in 2001.

"The infusion was a mere book entry that allowed BCCL to balance out a due of 2,539 crore to Coal India. We expect the networth of the company to be about 400 crore," Amitava Saha, director, finance, at BCCL, told ET. "The cut-off date for registering a positive net worth was March 2014, but this was achieved a year ago." These preference shares are to be redeemed at the expiry of seven years from the date of issue and allotment. However, Coal India would have the option to redeem them at any time after the expiry of five years from the date of issue and allotment of the shares.

This assumes importance because the performance of BCCL was pulling down the overall performance of Coal India, its holding company. BCCL produces high-quality coking coal, which is used by the steel industry. SAIL and other steel producers source a portion of their coal requirement from BCCL.

The company's networth had turned negative for the first time in 1994-95 after a string of losses since inception.