Ranchi, March 7: Jharkhand High Court today gave its assent to Heavy Engineering Corporation (HEC) to mortgage its plant and machinery for obtaining a loan of Rs 100 crore.

The public sector had applied for a loan to obtain funds from independent agencies for generating working capital to run the unit on a daily basis.

HEC has been negotiating with the State Bank of India to discuss the modalities of facilitating the loan and the interest rate that will be charged for repayment.

The need for the loan arose because of the heavy work pressure on the corporation.

The company has a number of orders under its belt, which have to be completed within a fixed time frame. Among the many big clients who have appointed the corporation for their fabrication and other works are the Indian Railways, Coal India and the Steel Authority of India.

Buoyed by work pressure, the PSU had approached the state government to provide Rs 100 crore as an advance from the revival package of Rs 250 crore that was sanctioned.

However, despite the sanction from the state, the approval from the Centre is still awaited and the funds are yet to be released. The proposal of doling out an advance to the corporation has also been ruled out by the state government.

The HEC has also approached the Union government to provide it with Rs 100 crore for completing the projects. The Union government has also not replied in the affirmative due to which the Corporation is left with no cash reserves.

Thus, in a bid to complete the pending orders and to bounce back on the right track, public sector unit approached Jharkhand High Court for permission to obtain a loan from independent financial agencies.

The court’s approval has now put the ball in the PSU’s court, which is keen on taking the matter up with national and private banks.

On July 6, 2004, the Board for Industrial and Financial Reconstruction (BIFR) had ordered that HEC be shut down permanently to stop further drain on the exchequer. The HEC then moved the court to challenge the closure and the court came to its rescue.