New Delhi, Jun 09, 2009: In the first such move in India’s chequered public sector history, the government is considering leasing out three production units of National Jute Manufacturers Corporation Ltd (NJMC) to private companies. NJMC has been sick since 1994 and had a negative net worth of over Rs 6,250 crore by 2007-08.
NJMC has six jute mills in West Bengal and Bihar. The units that are proposed to be leased out are Kinnison and Khardah in West Bengal and RBHM in Bihar. The remaining three factories-National, Alexandra, Union in West Bengal-are to be closed, according to the proposal of the textiles ministry, which administers operations of the company.
“Reviving the sick NJMC is in our priority list. We have proposed to lease out three of its units, while the other three are to be closed. We will take the proposal to the Cabinet at the first instance,” textiles secretary Rita Menon said. The company also has a sick subsidiary in Kolkata, Birds Jute & Exports Ltd, but its fate is not yet clear.
The entire proceeds from the lease rent and sales of the units will be used to offset the financial assistance given by the government to the company, another senior official in the ministry said. The units that are proposed to be closed have land assets worth Rs 310 crore, he said. The government has given Rs 1,210 crore to the company, including Rs 675 crore to settle the VRS claims, Rs 275 crore to offload the dues and liabilities and the balance for wages and salaries.
NJMC, set up in 1980, is under the supervision of Board for Industrial and Financial Reconstruction (BIFR) since 1994. The BIFR has recommended winding up of the company in the same year, but the case went into litigation and as per the latest information, the Appellate Authority for Industrial and Financial Reconstruction has put a stay on the BIFR order.
The company stopped production in 2004-05 due to non-supply of power after it failed to pay the pending bills. At that time, it had accumulated losses of around Rs 4,000 crore. However, in 2008-09 it resumed production but is manufacturing a small quantity of sacking only.
Under the revival proposal from the Board for Reconstruction of Public Sector Enterprises (BRPSE), the government had offered voluntary retirement scheme to the employees of the company. A total of 16,000 class IV employees and workers availed of the scheme. NJMC currently employs 250 officers and 18 clerical staff. At the end of 2007-08, the company recorded a net loss of Rs 487.13 crore and a negative net worth of Rs 6,254.62 crore.