Jessop, Balco, BCPL: Three stories of selloff

Kolkata: The sorry state of affairs at

Jessop

& Co Ltd, a public sector undertaking (PSU) which went under a divestment programme in 2003, could prove to be a dampener for the latest strategic divestment initiative of the Narendra Modi government in

Bengal Chemicals and Pharmaceuticals Ltd

(

BCPL

), another

PSU

.

The first NDA government had tested the ‘strategic sale’ waters when the then disinvestment minister

Arun Shourie

initiated the process by privatizing Balco (Bharat Aluminium) and erstwhile engineering major Jessop. These two strategic disinvestments, first of their kind in India, met with different fates. Balco, bought by

Vedanta

, is doing well. But the story of Jessop, acquired by

Pawan Ruia

, is a sad one.

For Jessop, the oldest engineering firm in India, life had come to a full circle when the Mamata Banerjee government took over the management of this 200-year-old entity on February 27, 2016 as the main factory of Jessop was lying closed for more than four years. Jessop, known for its construction of the iconic Howrah Bridge, the

Parliament House

and the first EMU coach in India (in 1959, before the

Integral Coach Factory

) became sick and was referred to

Board for Industrial and Financial Reconstruction

(

BIFR

) in 1995.

By 2003, Jessop had a negative networth of Rs 358 crore and that, perhaps, led it to the strategic divestment path back in August 2003. Ruia

Coatex

of the

Pawan Ruia-controlled Ruia

group had bought the controlling stake (72%) in Jessop through a bidding for a paltry sum of Rs 18.18 crore. In BCPL’s case, another city-based

Central

public sector undertaking (

CPSU

), the negative networth is Rs 185 crore and accumulated loss amounts to Rs 251 crore, which is relatively better than Jessop when it was divested more than a decade back.

The situation in BCPL looks even better than the then raw balance sheet of Jessop because the historic firm built by legendary

Acharya Prafulla Chandra Roy

has set a target of net profit of Rs 20 crore by 2020 and made a net profit of Rs 1.16 crore in the first half of this fiscal after as long as 63 years. The company had also posted a positive gross margin (profit before depreciation interest and tax) of Rs 11.24 crore in 2015-16 following a decade. BCPL also has 70 acres of land spread over

Panihati

in North 24-Parganas and Mumbai. Besides, it has big office premises in Kolkata and Mumbai. The oldest chemical factory in India has five acres of freehold land as well in Panihati, which could worth Rs 70-80 crore.

CMA

Chandraiah

PM, managing director of BCPL, told

TOI

that the company is on revival path. “For 2016-17, we should make a net profit of Rs 5-6 crore,” he added. Chandraiah argued that the profit could have been Rs 10-12 crore if the Centre cut interest rates on loan to a normal bank rate.

“Now, we are paying a 21% interest on the Central loan if this was 10%-11% then our profit would have been more,” he added. The PSU is expecting to post a turnover of Rs 100 crore by this fiscal and Rs 200 crore by 2020. BCPL has famous homecare and cosmetics brands like Cantharidine, Phenol, and White Tiger.