Centre decides to close NJMC, its subsidiary and Biecco Lawrie Ltd
10 Oct 2018
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The government will close loss-making central public sector units National Jute Manufactures Corporation Ltd (NJMC) and its subsidiary Birds Jute & Exports Ltd (BJEL) as well as Biecco Lawrie Limited (BLL).
NJMC has been incurring losses for several years and was under reference to BIFR since 1993. The company's primary product was hessian jute bags used for packaging of food grain used by the various state governments. Over the years, the demand for hessian bags has eroded and to that extent, it has been found to be no longer commercially viable to run the company.
The Mills of NJMC which were proposed for revival, namely, Kinnison Mill at Titagarh, Khardah Mill at Khardah and RBHM Mill at Katihar are under suspension since August 2016 (the last mill to be closed was Kinnison Jute Mill on 31 August 2016), because of the failure of the job contractor to execute the job efficiently and problems with the local labour. The different models of outsourcing operations which were attempted have not been successful.
Considering its past performance, market conditions and the competition from plastics and the capacity of private jute mills, it was noted that NJMC would not be in a position to recoup its negative net worth through operational profits. Also, NJMC has no staff/workers on its rolls. Hence, the closure.
BJEL, the subsidiary of NJMC, was referred to BIFR, which had considered a revival scheme. The draft revival scheme could not be implemented as conversion of land use was not agreed to by the West Bengal government and the representative. BJEL has no staff and as the factory is not in operation and its closure does not have any adverse implications.
The union cabinet chaired by Prime Minister Narendra Modi also approved the closure and disposal of fixed assets as well as current assets and depositing the proceeds from the sale of assets, after meeting the liabilities, in the Consolidated Fund of India.
As per the DPE guidelines, a Land Management Agency (LMA) will be engaged for disposal of assets. The LMA will be directed to carry out a thorough verification of the assets before undertaking their disposal in accordance with the DPE guidelines.
Ministry of Textiles does not propose to use any land or building of BJEL for its own purposes or for any of its other CPSEs and the Land Management Agency will be informed upfront accordingly.
The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi has approved the proposal for closure of the Biecco Lawrie Limited (BLL) including giving Voluntary Retirement Scheme (VRS)/ Voluntary Separation Scheme (VSS) to the employees of the Company.
The idling assets of BLL will be subsequently put into productive use after meeting all the liabilities in accordance with the extant guidelines of the government.
The petroleum ministry had taken various steps for revival of the company from time to time. However, it could not be revived and there appeared no possibility of revival of the company considering the competitive business environment as well as huge capital requirement. Continued loss has made further operations of the company not only unviable but also resulted in substantial distress to officials and staff due to uncertain future.
BLL is a Schedule ‘C’ CPSE with 67.33 per cent and 32.33 per cent equity share held by Oil Industry Development Board (OIDB) and Government of India respectively. The remaining 0.44 per cent shares are held by others.
