The government has decided to bail out three central public sector undertakings as part of its efforts to revive the ailing companies.

The Centre has decided to provide working capital to three sick units of Braithwhite & Company Ltd, Bharat Wagon and Engineering Company Ltd and Burn Standard Company Ltd.

This is in line with the United Progressive Alliance government's commitment in the National Common Minimum Programme to strengthen PSUs.

The Divestment Development: Complete Coverage

Following a meeting among officials of the ministry of heavy industries and public enterprises, ministry of railways and the Prime Minister's Office, it was decided that these PSUs would be revamped to provide wagons for the Indian Railways. The Railways have an estimated wagon requirement of around 10,000 annually.

Officials said the turnaround would be made possible as the PSUs have been supplying wagons to the Railways, but were facing shortage of working capital.

The Railways would give these units advances and banks would be directed to provide guarantees to help the PSUs, officials said. To be able to execute orders on time, the PSUs will be required to clear the backlog of orders.

The Railways used to supply bogie couplers, components needed for manufacturing wagons, free of cost to these PSUs.

However, in the past few years, private players have created an artificial scarcity of these bogie couplers, affecting production at these units. There have also been allegations that these units were unable to meet the standards set by the Railways.

Officials said nearly Rs 100 crore (Rs 1 billion) would be required to meet the working capital shortfall at these units.

There has been a demand for restructuring the rates that the Railways offer, considering the increase in input costs, especially steel.

Burn Standard Company Ltd has two large engineering units at Howrah and Burnpur in West Bengal. The company is sick and was referred to the Board of Industrial and Financial Reconstruction. The company's production in 2003-04 was worth Rs 176.92 crore (Rs 1.77 billion).

Braithwhite & Company Ltd was also referred to the BIFR. In fact, a revival scheme sanctioned by the BIFR was under implementation.

However, during the previous National Democratic Alliance regime, the process of divestment was initiated. In the light of the NCMP, a review was carried out.