Konkan Rly gets approval for financial restructuring

New Delhi: A financial restructuring proposal to bail out Konkan Railway was approved by the government.

The railway ministry had submitted the proposal of the Board of Reconstruction of Public Sector Enterprise (BRPSE) to the Cabinet Committee on Economic Affairs (CCEA) for its approval.

Briefing reporters on the decisions taken at the CCEA, Science and Technology Minister Kapil Sibal said the meeting approved the proposal which provides for support by the railway ministry for three years and continuation of Konkan Railway Construction Limited (KRCL) as a Central Public Sector Enterprise even after discharge of its debt liabilities.

The proposed arrangement for financial support for interest and redemption liabilities will be reviewed before the lapse of three years.

Approvals of the CCEA would be implemented within a period of six months, the minister said.

The Konkan Railway project was sanctioned in 1989-90 for construction of a railway line along the Western coast from Roha to Mangalore with a route length of 741 km.

KRCL had resorted to commercial borrowing on a high interest rate. Being treated as a company, KRCL was not extended concessions like exemption from payment of dividend during the construction period.

A company could not serve the debt liabilities accrued during the construction phase due to non-materialisation of projected traffic. Construction of KRCL had been seen as an instrument of social and economic development in states of Maharashtra, Goa, Karnataka and Kerala. It will provide the shortest route from Mumbai to Mangalore saving about 24 hours of travelling time.

CCEA has also approved the Manipur government proposal to extend the 27-km rail line from Tupul to Imphal so as to provide direct rail connectivity to the state capital with rest of the country.

The increased expenditure for the extension proposal is estimated to cost Rs 2,650 crore.

Since the project is a national project, 25 per cent funding will be from the railways’ gross budgetary support and 75 per cent from the finance ministry as has already been approved for similar other national projects of the North Eastern region.

The proposed new broad gauge line will be providing rail connectivity up to Imphal as well as make possible direct movement of freight and passengers from this region to other parts of the country.

In another decision, the CCEA today allowed Mauritian private equity firm TPG India Investment to invest up to Rs 805.61 crore in South India-based Shriram Group's retail finance venture Shriram Retail Holdings.

“The approval is for issuance of equity shares and warrants in Shriram Retail to TPG India, Mauritius,” Sibal told reporters after the meeting.

He said according to the approval, TPG India (TPGI) would be issued 18.34 lakh equity shares and 15.38 warrants of Shriram Retail Holdings.