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Thursday, May 02, 2002

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Corporate - Sick Units

BIFR stand on Jessop puts Govt in a spot

P. Manoj


THE Union Government may not take up BIFR cases again for privatisation after the quasi-judicial body asked the Operating Agency to come up with a fresh scheme in six weeks for reviving Jessop & Co keeping in view the package submitted by the Centre.

At a hearing held here on Tuesday to consider the package submitted by the Union Government for reviving Jessop & Co including the induction of a strategic partner, the Board for Industrial and Financial Reconstruction also asked the operating agency, SBI, to evaluate whether the Government had adopted transparent procedures in finalising the strategic partner.

The stand taken by the BIFR has raised the hackles of the Union Government. "After going the whole hog in selecting a strategic partner through a transparent bidding process, the Cabinet Committee on Disinvestment (CCD) has now the BIFR directing the operating agency to sit in judgement over its decision. The BIFR should at least have had the sense not to do such a thing," Government sources said.

Chastened by the developments, the Union Government is of the view that it should not take up BIFR cases again for privatisation. "It is a sheer waste of time. The Disinvestment Commission had said that it would not take up BIFR cases for processing and recommendations. We should also do the same," a senior Government official remarked.

The BIFR decision, besides involving more time for the operating agency to evaluate the revival package submitted by the Union Government and come up with a fresh scheme, would result in bidders backing out, according to the Government. "Who will wait for another six months till the operating agency submits a fresh scheme for the consideration of BIFR?" the official asked.

During the hearing, BIFR said that it was not concerned so much about the change of management as long as the company was revived. "By implication this means that BIFR wants the operating agency to find out whether the strategic partner selected by the Government would revive the company or not," the official stated.

On its part, the Government made it clear that it would not sink any further money in reviving Jessop & Co if its package was not found suitable by BIFR.

Interestingly, SBI had already considered and cleared the revival package submitted by the Union Government before BIFR took up the case.

The revival package involved induction of Ruia Cotex as strategic partner in Jessop & Co holding 72 per cent equity for a consideration worth Rs 18.18 crore besides a non-fund support of Rs 140 crore and a financial support of Rs 63 crore for converting Government loans into equity and write-off/waiver of interest and penal interest and settlement of bankers dues.

Incidentally, BIFR took about two months to hear the case after the Union Government had submitted the revival package on March 7.

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