MINERAL EXPLORATION CORPORATION LTD. (MECL)
The Mineral Exploration Corporation Ltd. (MECL) was established in 1972 and it became a public limited company in 1975. Prior to MECL, Geological Survey of India (GSI) was the sole agency for carrying out exploration work in the country, except for coal. To give a commercial bias to mineral exploration and to bridge the gap between initial discovery of a mineral prospect and its eventual exploitation, functions such as detailed mineral exploration, equipment and personnel were transferred from GSI to MECL.
MECL’s Head office is at Nagpur and other offices are in Delhi, Kolkata, Hyderabad, Neyveli (TN) and Ranchi (Jharkhand). Its primary area of operation is to drill and explore for minerals. Government owns 100% of its equity. It had a paid up capital of Rs 67.75 crores in 2001-02 and has been in loss since 1990-1991.
The Disinvestment Commission in its 11th Report submitted in July 1999 recommended the following three alternatives for MECL:-
In August, 2000 it was decided to allow MECL to implement VRS though it would be financed out of the funds raised by the company itself and to continue their operations and apply for prospecting licenses. Disinvestment in MECL would be considered in 2002-2003.
By 31st March 2002, the strength of regular employees came down to 2557 from a level of 3105 as on 31.12.1999 and the target fixed by MOM was to further reduce the strength of employees to 2000. The VRS was implemented on the basis of Government support provided to the company. No further support was sanctioned for 2002-03 and therefore no further reduction in the employees’ strength has taken place.
Since MECL could not reduce its staff strength through VRS by its internal resources, Government has now decided to initiate the disinvestment process in MECL. It has been decided to disinvest 51% equity in Mineral Exploration Corporation Ltd. (MECL) in favour of a strategic partner with transfer of management control. Any restructuring that may be required would be considered in consultation with the Advisors and prospective bidders and would be submitted to CCD for approval. The advertisement inviting Expression of Interest from bidders would mention that the Government may consider a financial restructuring package to be implemented contingent on disinvestment, so as to allay any apprehensions the bidders may have with respect to the viability of the company.
Recommendations of Disinvestment Commission
-> To implement a VRS and reduce the manpower by 800 employees on the basis of support provided by the Government to the company. The company would also apply for prospecting licenses, which were expected to enhance the value of the company. On this basis, disinvestment of upto 51% equity held by the Government could be attempted.
-> To sell 100% of the equity of MECL on ‘as is where is’ basis.
-> To close down the operations of MECL and liquidate its assets and liabilities if neither of the first two options were found to be viable.