The Centre today gave its nod for restructuring of beleaguered engineering PSU Bharat Bhari Udyog Nigam (BBUNL) to improve performance of units located in West Bengal and Tamil Nadu.

The Cabinet Committee on Economic Affairs (CCEA) approved the restructuring, which involves waiver of interest on government loans to the tune of Rs 639.15 crore.

As part of restructuring, administrative control of two subsidiaries of BBUNL -- Burn Standard Company (BSCL) and Braithwaite & Co -- will be transferred to the Railways from Heavy Industries and Public Enterprises Ministry.

Besides, refractory unit of BSCL at Salem will be given to Steel Authority of India and another subsidiary, Braithwaite, Burn and Jessop Construction Co, will be merged with BBUNL.

Together with interest waiver of government loan, the restructuring will also include conversion of plan loan of Rs 31.7 crore, non-plan loan of Rs 350.82 crore and zero rate debenture of Rs 75.03 crore given to BSCL into equity.

Subsequently the equity will be reduced by Rs 457.55 crore with a corresponding reduction in accumulated losses.

Also, the plan and non-plan loans of Rs 28.16 crore and zero rate debenture of Rs 14.30 crore given by the government to subsidiaries of BSCL will be converted into equity.

This equity will also be reduced by Rs 42.46 crore with a corresponding reduction in accumulated losses.

The government will also provide Rs 14.16 crore non-plan fund in the form of equity for discharging current statutory liabilities.

"Transfer of wagon making companies to the Railways will help companies become commercially viable as this would resolve basic problem being faced by them," Home Minister P Chidambaram told reporters after the CECA meeting.

Similarly, upon transfer to SAIL, the Salem unit will have access to funds for modernisation and capacity expansion.

Improvement of the financial performance of BSCL and Braithwaite will improve the compensation to the workmen and contribute to further economic development of the areas in West Bengal and Tamil Nadu where these units are located, he said.

BBUNL is engaged in design, manufacture, supply, erection and commissioning of a wide range of capital goods and turnkey projects required by the core sector.