BEML-led joint venture appoints SBI Caps to revive ailing machinery PSU

The three-way joint venture between public sector firms BEML, Coal India and DVC has appointed SBI Capital Markets to chalk out a revival strategy for an ailing state-owned entity that they had earlier acquired.

SBI Caps would soon submit its report on restarting operations of Mining and Allied Machinery Corp Ltd (MAMC), a West Bengal-based public sector undertaking which has remained closed for long.

"SBI Caps has been appointed for a viability study. We would be concentrating mainly on underground mining equipment as the facility is suitable for such machines. But the market has limitations as underground mining is not very widely used," B R Vishwanatha, director - mining and construction, BEML, told DNA Money.

Offering a comprehensive and diverse range of mining machinery, BEML has ventured into underground mining equipment as well. At the same time, expected revival in the global mining industry has opened up new avenues for BEML in contract mining.

While the joint venture was signed in 2011 followed by the acquisition of MAMC's assets, the revival operations could not be started, mainly on account of the 2008 recession which impacted the industry.

"Almost four years are over since we took hold of the assets at Durgapur from the liquidator. But operations are yet to start. We had some business plans which are being reworked," Vishwanatha said on the sidelines of Asian Mining Congress, organised by the Mining, Geological and Metallurgical Institute of India.

According to the joint venture pact, BEML has the operational control, holding 48% equity while Coal India and DVC hold 26% each.

Following the acquisition of the assets from the official liquidator, Central Mine Planning & Design Institute (CMPDI), a consulting subsidiary of Coal India, was engaged to work on a techno-feasibility report.

The strategy suggested by CMPDI is now being reworked.

MAMC was referred in 1992 to the Board for Industrial and Financial Reconstruction (BIFR) after no measures could be identified to revive it. BIFR then recommended in 2001 winding up of the company.

It had close to 800 workers in its payroll and creditors like State Bank and United Bank of India whose dues have been settled.

MAMC also has 95 acre of factory land and another 100 acre of residential complex.

Calcutta High Court in 2010 approved the sale to the consortium of BEML, Coal India and DVC for a total sum of Rs 100 crore.

The joint venture partners had promised to chip in Rs 200 crore in equity to revive operations.