| wait for the last word
Calcutta, Sept. 24: The Board for Industrial and Financial Reconstruction (BIFR) has cleared the sale of Jessop & Co to Ruia Cotex Limited.
Ruia Cotex had acquired 72 per cent of Jessop & Co for Rs 18.18 crore following the Central government’s decision to disinvest in the company. The sale was cleared by the disinvestment ministry in February.
BIFR has also cleared the Rs 203-crore draft revival scheme (DRS), under which the government will provide a cash component of Rs 63 crore and write off loans to the extent of Rs 140 crore.
“There is a complete consensus among all parties covered under Section 19 of the Sica Act on the terms of the draft revival scheme circulated on June 28, 2002, subject to modifications as discussed in the hearings. The bench accordingly sanctions the scheme after incorporating the above amendments. The implementation of the scheme would, however, be undertaken only after obtaining leave of the High Court of Calcutta,” the BIFR order said. The order was passed by BIFR chairman P. P. Chauhan.
Ruia Cotex promoter Pawan Kumar Ruia said, “We will place the order before the Calcutta High Court tomorrow. There will be two more hearings at the court.”
The unions had moved the court against the government’s decision to sell the company to Ruia Cotex at a nominal price of Rs 18.18 crore. Jessop has two factories—one at Dum Dum and another at Durgapur. The Durgapur factory is currently closed. The staff strength of the company is 1,485.
“We will run the Dum Dum factory first. If successful, then we will think about the Durgapur factory,” Ruia said.
The company was referred to BIFR almost four to five years back, but it was unable to find a suitable promoter for the company. Following this, the government decided to sell off its stake in the company.
State Bank of India (SBI) has been the operating agency of Jessop & Co.
In the BIFR hearing held on August 20, the workers union submitted that they had grave doubt about the financial credibility of the new promoters in raising funds. The government representatives clarified that the sale would take place only after the company had paid the entire amount of Rs 18.18 crore.
The bench directed SBI to carry out the amendments discussed in the hearing and further directed the company to submit its views regarding concessions sought from the workmen. Following this, SBI submitted a revised DRS which has been accepted by all parties.