Jessop an Obituary (1788 – 2013) : Chawm Ganguly

jessop15th November 2013. Even as you read this piece, the death knell of the 225 year old heritage engineering giant Jessop & Company has begun tolling, in the process sealing the fate of 685 workers directly. The shutdown, which is now just a matter of time, will also mean the end of an Engineering legacy that has few parallels anywhere in the world, bolster the argument of the Cassandra’s who claim that the environment conducive to industry is conspicuous by its absence in West Bengal, apart from seriously raising questions about the abilities of the owner, Pawan Kumar Ruia as a “turnaround” wizard.

It had started as a routine transfer order served on some employees who were asked to proceed to Port Blair for some contractual maintenance work. “Politically Conscious” as the workers in Bengal are, they had promptly refused; alleging a management ploy to force them to a corner and ultimately lead them to a premeditated retrenchment. Labour Militancy – the bane of Bengal bared its dirty fangs and it was another case of a handful holding the majority to ransom. The factory periphery was doused in microphones, which in the absence of “actual” workers voicing their “genuine” grievances were used to play “pre-recorded” messages that religiously called the faithful for Jihad. Company officers where “gherao-ed” at the smallest of pretexts, “outside” musclemen roped in to disturb peace and to generally engineer chaos in order to force the hand of the management. As many as 50 odd FIR’s were lodged with the local police, which showing “exemplary restraint and professional ineptitude” looked the other way in obvious sympathy with the cause of the “offending” workers.

 Work (?) came to a standstill, with the reluctant Pawan Ruia, burdened by monthly wage bill of INR 2 crores and unable to meet the delivery schedules, wrote to the concerned Ministry with two proposals: either fix production targets, or allow downsizing. People in the know, including journalists who have seen the letter, find nothing abnormal (or as is being alleged in some quarters, “illegal”) in the letter; especially in the context of “salvaging” the future of India’s oldest Engineering firm, along with the stature of the state as an “industry friendly” one.

But it was here that Ruia’s image, as someone “close” to the erstwhile Left Front Government and therefore, a promoter of dubious intent, whose sole purpose is to force industries down to use its land for commercial purposes played spoilsport. In a meeting called by the Hon. Minister in which the labour unions were also a part, not only were the proposals turned down with the snide contempt they did not deserve, Jessop (read Ruia) was in fact asked to either run the factory with full workforce or shut shop, in not so many words.

The hapless Ruia wrote to the Government seeking permission for shutdown, which naturally, means that the Government is now holding the hot potato. It cannot “force” Ruia to start anew, nor can it allow him to down shutters. But the fact is that it is 15 days since that fateful meeting on October 30th. We have had Sachin’s last appearance in the Eden Gardens, Mumbai’s constellation descending on Kolkata for the film festival, Shootout in Short Street and a host of other news grabbers that are more important than the closure of an industrial unit, (even if it happens to be the oldest this side of the Suez) and certainly the casting of aspersions on a “promoter’s” intentions to grab the headlines, leave alone the kind of dissection of the facts as one would have expected.

I for one do not ascribe to the “close to the Left Front” logic. Industrialists harbour no political leanings for their own sake. They are often “forced” to open their purse strings, but that is more as homage to the powers that be, than anything else, ideology be damned. Ruia too, is no exception and like the old ball that he is, is capable of swinging both ways. Besides, if he was really that close to the then powers that were, he would have converted his land into housing way before this Government assumed power? Would he have, by the same logic bought Dunlop without its Crown Jewel, the heritage Head Quarters in Free School Street, if it was only “promoting” that he was after? Alas, when the allegations fly, the first victim is the truth.

But is Pawan Ruia really the sinister, land-grabbing monster that he is made out to be? What does his record in the specific instance say? Jessop was taken over when West Bengal was a basket case and there were no takers for what was then considered to be a terminally sick case. Since then, the company has consistently “performed” – far below its true potential – but still better than the depths to which it had sunk. This, despite a labour force that has neither been willing, nor, efficient. And with a highly unionized and politically vitiated atmosphere that is everything but excellence in productivity inducing.

To be fair to the man, Ruia had literally turned around the company in record time (as is evident from the Annual Reports that are available in the public domain). Now to “engineer” (no pun intended) a forced drowning, that too after having hand-cuffed him with labour militancy and Governmental apathy can in no way, either make him responsible for the current impasse or, take away his media anointed crown of a “man with the Midas Touch”.

Pawan Ruia in a pensive mood
Pawan Ruia in a pensive mood

The investment that Ruia has “sunk” into Jessop since is takeover is about INR 300 crores. The company reportedly has orders of another INR 300 crores in hand, with a combined liability of INR 230 crores on date. That is to say, if Ruia were to shut shop tomorrow, meet all its liabilities and convert the 71 acres of “prime” land into a Housing Estate as the skeptics allege, he would still actually fall short financially, miserably at that, leave alone the years that he has “wasted” since the takeover!

Forget about the shrewd industrialist who came out of nowhere to build an empire spread across continents that Ruia is, even your friendly neighborhood politician wouldn’t take that gambit.

The two Howrah Bridges, the innumerable wagons, the road rollers, the Parliament House, India’s first iron bridge over River Gomti … all will remain, so will Ruia and the Government, only the entity that sought its date with eternity through engineering excellence will die a quiet, unsung death. Who will take the blame for “engineering” this untimely and unfortunate end? Who cares? If we are callous enough to allow things to have come to this state (no pun intended), we will certainly look the other way, secure in the belief that “this too, shall pass”.

JESSOP Financials:                                                                  (INR Crores)

Year ended 31 March 2013 2012 2011 2010
Turnover 157.60 272.80 268.69 237.35
EBIDTA 27.3 37.07 43.32 36.68
Depreciation 7.99 7.32 6.17 4.26
PROFIT AFTER TAX but before exceptional items 1.61 9.86 23.79 22.30
Net Profit Margin 1.02 3.61 8.85 9.40
Debt 229.01 177.07 165.83 118.92
Equity Capital 61.51 61.51 61.51 61.51
Equity Dividend (%) X X 3 3

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