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Jessop suspends work, fuels lockout fears

LiveMint logoLiveMint 15-05-2014 Manish Basu

Kolkata: Jessop and Co. Ltd said it suspended work at its factory on the northern fringes of Kolkata late on Wednesday evening, fuelling speculation that the erstwhile state-run railway wagon maker could eventually be closed down in the same manner as tyre maker Dunlop India Ltd.

Both companies are controlled by the Ruia Group.

The move immediately drew the state government’s attention, which on Thursday threatened to launch a probe into the operations of Jessop unless its management agreed to restart production. The company cited labour unrest, theft of machines and security threat to its key managers as causes for formally halting production.

Around 600 workers, who claimed they have not been paid salaries for at least five months, have now become redundant.

A spokesperson for the Ruia Group did not answer calls or reply to text messages sent to his mobile phone.

The Ruia Group, headed by Kolkata-based entrepreneur Pawan Kumar Ruia, took over Jessop in 2003 under the Union government’s disinvestment programme in a controversial deal that was legally challenged by a competitor.

“All the excuses given by the management are blatant lies,” Purnendu Bose, West Bengal’s labour minister, said in an interview. The state government will give Jessop’s management “one last chance”, but if it fails to establish its commitment to run the company, the Ruia Group will figure out that the “administration is mightier than a private promoter”, Bose said.

The state government has scheduled a meeting with the management and Jessop’s workers on 19 June, and unless the Ruia Group is able to produce a roadmap for reviving Jessop, the state will ask the police’s economic offences wing to start an investigation, according to Bose.

Dunlop, too, went down the same path as Jessop, but in this case the administration will act “more promptly”, Bose said, adding that the state government couldn’t do anything to rescue the tyre maker because it got embroiled in legal battles with creditors.

Dunlop is currently facing several winding-up petitions, and has challenged in the Supreme Court a Calcutta high court verdict ordering its liquidation.

Jessop had in November issued a notice threatening to close down its factory, but was forced to retract it under pressure from the state government. Though the railways have stopped issuing orders for new wagons, Jessop still had orders worth around `150 crore, claimed workers. Even so, almost nothing had been produced at Jessop’s factory in the past few months, they added.

The timing of Wednesday’s announcement shows the move was pre-meditated, said Asit Sen, a leader of the Centre of India Trade Unions (Citu), a workers’ union. So as not to embarrass the state government, the management waited till polling ended in the general election, said the Citu leader.

Mint and Ruia Group-owned Dunlop are fighting a case in the Kolkata high court over the paper’s coverage of happenings in the company.

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