New Delhi, April 6: The Burn Standard management has, on instructions from the government, advised the unions to set up a co-operative that can vie with the bidders to take over the firm.
The unions and officers’ association have been advised to set up a co-operative with at least 500 workers who could together create a Rs 1-crore corpus with the help of bank loans or guarantees that will be needed as net worth to put in a bid.
The Centre is willing to waive the turnover criterion of Rs 10 crore in this case if the unions decide to bid. The unions, on the other hand, are planning to approach the Calcutta High Court to thwart the selloff move by citing the Jessop case as a precedent.
Their argument is that the Board for Industrial and Financial Reconstruction (BIFR) had asked the Centre to carry out a valuation in a transparent manner and find a joint venture partner to revive the firm.
Instead of conducting a valuation, they say the government has sought expressions of interest for the wagon maker. Hence, the unions feel that the selloff process “is flawed and absolutely opaque”.
Their contention is that company’s assets may well be undervalued as was the case with Balco and Jessop which might lead to divesting the government’s stake to “undesirable trading outfits interested in the rich assets — mainly the real estate.”
The unions also fear that the bidders could be private railway wagon makers who have already formed a cartel. They held meetings last month with industry and railway ministry officials to avert this possibility.
The government wants to offload some 60 per cent stake in the Asansol-based Burn Standard, which in turn is a 100 per cent subsidiary of Bharat Bhari Udyog.
The 200-year-old company has two major engineering units, one each in Howrah and Burnpur, besides refractory units in Bengal, Bihar, Madhya Pradesh and Tamil Nadu. It also has an offshore platform fabrication yard at Jellingham in Midnapore district.
Burn Standard is one of the largest wagon manufacturers in India with an installed capacity of 8,661 four-wheeler units with about 1,800 workers. Last fiscal, it notched up Rs 100 crore turnover.
It is backed by composite infrastructure for manufacture of special wagons for transporting alumina powder, cement, fertiliser, milk (in stainless steel tank) and tank wagon for transportation of liquid petroleum gas. It also has a steel foundry for the manufacture of cast steel bogies for wagons and couplers for wagons.
BSCL delivers a wide range of other engineering and refractory products and services such as tram-cars, bridge girders, steel plant and mining equipment.
The government has retained UTI Bank in association with Deloitte Touche and Tohmatsu India Pvt Ltd as advisors to Bharat Bhari Udyog for the proposed disinvestment process.
Besides the two criterion of having a Rs 10 crore turnover and a net worth of Rs 100 crore, bidders can also be a consortia of firms in which the leader should have at least Rs 51 crore turnover.