Sources said even before the hearing could begin, ECL managing director informed the board that its net worth had improved on account of the capital restructuring undertaken by the company in the previous month. ECL was registered with BIFR in April end.

According to ECL sources, the company has worked out a turnaround package under which CIL has converted an unspecified amount of its loans to ECL into equity. Last year, CIL had extended a similar cushion to ailing Bharat Coking Coal Ltd.

This increased the paid up share capital of the company by Rs 1122 crore, as a result of which its net worth had improved and thecompany had come out of BIFR in December. Both BCCL and ECL are two of the largest subsidiaries of CIL.

Though CIL's similar step for ECL has improved the company's net worth, the audited results expected to be out in August will prove a litmus test for ECL.

ECL had incurred an accumulated total loss of Rs 1187 crore till March 31 last year, more than its net worth of Rs 1039 crore. In 1997-98, ECL had lost a whopping Rs 547 crore at a time when its budgetary support was withdrawn by the government. Though Coal ministry mandarins had favoured bailing out ECL from its sickness, CIL was not expected to be in a position to do so.