Cabinet approves Konkan Railways’ financial restructuringDecember 4th, 2008 - 5:51 pm ICT by IANS
New Delhi, Dec 4 (IANS) The cabinet committee on economic affairs Thursday approved the financial restructuring of Konkan Railways Corp (KRCL) by the railways ministry.The proposal provides for handholding by the Railways for three years and continuation of 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,” a government statement said.
The cabinet approval will be implemented within six months.
During the construction phase, KRCL had to resort to commercial borrowings on a high interest rate. Being a company, it was not extended exemptions like concession of payment of dividend during the construction period.
KRCL could not serve the debt liability accrued during the construction period due to non-materialisation of projected traffic, goading the ministry to propose its financial restructuring.