FM keen to sell Jessop stake

NEW DELHI: Inclined to sell the government''s remaining stake in Jessop and Company to strategic partner Ruias, Finance Ministry has asked the Law Ministry if it can be done.

"Ruias had written to the government to acquire the government''s remaining 27 per cent stake in Jessop. Finance Ministry is in favour of the sale. It has asked the Law Ministry if it can be done in view of a case filed against any such move by employees of the company," sources told the media.

The government has sold 72 per cent stake in the company to Ruia Cotex for Rs 18.18 crore in 2003.

While inducting Ruias as a strategic partner for the turnaround of Jessop, the government has given the group an option to pick the government''s remaining stake.

When the disinvestment process of Jessop was on, the employees had gone to the court. The matter went up to Supreme Court but it too refused to stay the sale of 72 per cent stake by the government in the company.

With the Ruias now approaching the government for acquiring remaining 27 per cent stake in Jessop, the employees of the company again went to Supreme Court with a petition questioning the disinvestment in the erstwhile PSU in 2003.

As the matter has again gone before courts, Finance Ministry has sought Law Ministry''s opinion whether it can go ahead and sell its remaining shares in Jessop.

The company, which was running in losses, posted profit in the last quarter of 2003-04. For the whole of 2004-05 its net profit stood at Rs 4.82 crore as against a net loss of Rs 6.38 crore in 2003-04. Following the acquisition of the remaining stake, Ruias have declared their intention of going for restructuring of Jessop''s balance sheet to wipe out the accumulated losses so that the ailing former public sector company could come out of BIFR.

It has already passed a resolution to reduce the face value of its shares from Rs 10 to Re 1. It has an authorised share capital of Rs 100 crore.

This way, the company will be able to squeeze out Rs 90 crore, which then would be set off against accumulated loss.

Jessop, which manufactures railway wagons, EMU coaches, road rollers and cranes, has also sought the approval from the BIFR in this regard.