The Board for Industrial and Financial Reconstruction (BIFR) has recently submitted its Draft Rehabilitation Scheme (DRS) to revive the now closed 3 public sector jute mills of National Jute Manufactures' Corporation (NJMC) - Kinnison and Khardah in West Bengal and RBHM Jute in Bihar.
On March 19, 2010 the CCEA had approved the restructuring proposal of NJMC based on the findings of the operating agency IDBI.
It was only after that the BIFR recently finalised the DRS for the 3 units of NJMC.
The revival proposal includes sale of NJMC's surplus lands and assets to liquidate its market and other outstanding.
The BIFR has submitted its report to the Union ministry of textiles this year on January 5.
In its report, it has proposed that the governments of West Bengal and Bihar should waive their loans given to NJMC of around Rs 12 crore and Rs 1.23 crore respectively.
The 3 other mills - National, Union and Alexandra—all located in West Bengal--will be closed down as they have been found to be unviable.
BIFR is open to any objection raised from any quarter against the revival scheme before March 31 2011.
The cost to revive the 3 NJMC units has been estimated to be Rs 1562.98 crore which includes an additional budgetary support of Rs 145.45 crore as interest free loan to meet the revised cost. NJMC will have to repay the loan in a phased manner starting from 2013-2014 to 2024-2025. For full and final settlement of dues of its officers and executives the composite package of pay scales of officers will be based on 1992 & 1997, and the VRS will be based on 1997 pay scales, while for other arrears @ of 40 per cent may be offered in the light of the judgment of Calcutta High Court.
Till now NJMC has granted VRS to 16324 workers in its six mills and 882 clerical staff with an outgo of around Rs 439.24 crore as compensation towards VRS, terminal dues and arrear salary.
As per the revival proposal, a financial restructuring of Rs 6815 crore by way of outstanding loans and liabilities of Rs 2722.02 crore and an interest of Rs 4093.04 crore will be written off by the government against accumulated losses of Rs 11,423 crore and a negative net worth of Rs 5399 crore as on March 31, 2010.
Due to non-viability, Alexandra and National were closed down in 2002 and 2003 respectively, while Kinnison, Khardah, RBHM and Union were closed down in 2004. The six NJMC had a total installed capacity to produce 525 TPD of jute goods.
The DRS proposed by BIFR says that NJMC fell sick because poor capacity utilisation due to old machines, low productivity of labour, lack of modernisation, surplus manpower and high wage bill, high wastage and manufacturing cost and unfavourable market conditions.
At one point, NJMC had clocked a hand per tonne (HPT) on production of over 80 as against the industry standard of 34 and JMDC productivity norm of 42.9.
