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Jessop caught in selloff scrum

New Delhi, Sept. 17: It’s now the turn of the Bengal Brigade to nix disinvestment minister Arun Shourie’s selloff policy. Ministerial moves are afoot to reverse Jessop & Co’s sale to the Ruias and a Cabinet note has been prepared to revive Bengal Immunity and Bengal Chemicals instead of placing them on the block.

Bengal’s representative in the Union cabinet, Tapan Sikdar, minister of state for fertiliser, who is known to be close to Deputy Prime Minister L. K. Advani, is moving the Centre to reconsider the sale as Jessop’s creditors, including the Bengal government, have demanded bank guarantees which are not readily available.

Sikdar told The Telegraph: “Jessop’s sale to Ruias should be reversed as banks don’t seem to support it.” He hinted the way out of the imbroglio over the sale contracted by the Centre, which is now before the Board for Industrial and Financial Restructuring (BIFR), was to consider a reversal.

A problem had arisen with the West Bengal government demanding a Rs 38-crore bank guarantee for loans given to the company. Although the state government is willing to reconsider its initial demand, the selloff plan is still being resisted by banks, which have to give various concessions. As a result, BIFR has yet to clear it.

“We are not against disinvestment but the policy should be well thought out and the selloff conducted after taking into all factors into consideration,” Sikdar said.

Ministers opposed to the divestment policy have been calling for a rethink on the policy of indiscriminate selloffs. They want it replaced with a policy that takes into account issues like strategic considerations, profitability of the company, potential for use as a market intervenor to bring down prices. They also want to ensure the selloffs fetch good returns.

The Jessop selloff has been severely criticised by many for having fetched just Rs 18.18 crore, when its land assets itself are valued at several hundred crores and it enjoys considerable brand equity in the heavy engineering sector. The chemicals minister is now proposing a two-part plan to sell off surplus land available with Jessop which, he says, should fetch at least Rs 100 crore. The sum could be used to fund a voluntary separation scheme for half of Jessop’s 700 strong workforce.

“Once this is done, I am confident it will do well as there is still a strong demand for its products — rail wagons, road rollers and cranes,” the minister said. Sikdar’s senior in the ministry S. S. Dhindsa is already active in the “anti-disinvestment movement” within the BJP-led cabinet having demanded reversal of a decision to sell off National Fertiliser Ltd.

Chemicals ministry officials said Sikdar had also initiated a cabinet note for a revival package for Bengal Immunity and Bengal Chemicals, two pharmaceutical firms set up as part of the nationalist movement by Congress leaders in the early 20th century, which the disinvestment ministry is eyeing for divestment. Bengal Chemicals has turned around and merely needs a restructuring exercise, while a cash infusion plan is being readied for Bengal Immunity.

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