Even though the finance ministry has decided to liquidate sick Elgin Mills Co Ltd, the government?s sick PSU doctor?the Board for Reconstruction of Public Sector Enterprises (BRPSE)?wants to approach the Uttar Pradesh government once again to revive the firm. The UP government has already scuttled the revival proposal three times.
?The finance ministry wants to liquidate the mills but we are in the favour of reviving them. We have decided to refer the matter to the ministry again, suggesting re-examination. We have to take a fresh approach on the matter,? a top official in BRPSE told FE on the condition of anonymity. The decision was taken at a recent meeting of the BRPSE board.
Last month, the Uttar Pradesh government rejected BRPSE?s proposal to sell the land of first unit of Elgin Mills to revive the second mill. The Mayawati government rejected the proposal on the ground that the land in question is leasehold and could not be converted into freehold. Following this, finance ministry decided to recommend the closure of the entire entity. One unit of Elgin Mills is already closed.
Till now, the Centre has made three fruitless efforts to convince the UP government to allow the conversion of land to freehold so that it could go ahead with BRPSE?s proposal of reviving the second mills of the company with sale proceeds of the land.
Elgin Mills is a subsidiary of British India Corporation (BIC), which was declared sick in 1992 and the Board of Industrial & Financial Reconstruction (BIFR) approved Rs 210-crore plan in December 2002 to revive two units of BIC at Lalimli in UP and Dhariwal in Punjab. The company was expected to generate Rs 125 crore through the sale of land to make a one-time settlement with its creditors. However, the plan could not be implemented in full due to then UP chief minister Mayawati?s refusal to convert the Lalimli land into freehold.
On the recommendation of BRPSE, the Centre again approved a revival package in 2005 by making an additional non-plan allocation of Rs 47.35 crore as consideration for the conversion of land. This time, land of Elgin Mills was also included in the proposal. But, the then UP chief minister Mulayam Singh Yadav scuttled the proposal. At the end of 2007-08, Elgin Mills was saddled with losses of over Rs 1,000 crore and overdue interest of over Rs 500 crore on government loans.