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For decades, people living near Jessop & Co.'s wagon manufacturing plant on Jessore Road near Dumdum used the sirens set off by the company several times a day to regulate their lives. "Clocks and watches were not something every household used to have; the siren at different hours of the day would indicate the time to us," says Bhola Prasad Yadav, a former worker at the plant who retired after 43 years of service.
Things began to change a few years ago. First, the sirens fell silent. Then, workers were forced to take voluntary retirement. And now, the owner of the company, Pawan Kumar Ruia, has written to the West Bengal government for permission to permanently close the 225-year-old plant from November 15, citing law & order and labour problems.
The livelihood of 685 workers, as also of some former workers who are awaiting their retirement dues, is at stake. "I have dues of Rs 30,000 from the company, and there are many others like me. We cannot let it go like this," says Yadav who had joined the company in 1968. He is now the convener of the Jessop Raksha Committee, a pressure group that has decided to take up the cause of workers and is widely believed to be backed by Trinamool Congress MP Saugata Roy.
The tussle is wide open from here. But if the factory shuts down, it will be yet another example of West Bengal's adverse industrial climate. Jessop is the country's oldest engineering company. Set up in 1788, it has many firsts to its credit: the country's first iron bridge, the first boiler and parts of the iconic Howrah Bridge in Kolkata. "Even the structure of India's Parliament building was built by Jessop. Such is its heritage. It does not deserve this fate. The government should do something about it," says Kameshwar Pande, a worker at the plant.
Root cause
The current crisis owes its genesis to a transfer notice served recently on 23 workers. According to Jessop executives, the workers were being sent to Port Blair for contractual maintenance. But the workers saw it as a "ploy" to force some of them to take voluntary retirement. "This tactics has been used many times. When Ruia took over (ten years ago), there were 3,000 employees. Now, the strength has reduced to 685," Pande says. Ruia, who finds himself at the receiving end of several allegations and whose reputation for turning around sick companies is under question, says: "A handful of anti-social elements have made a big issue out of it. There has been no work at the factory for the last few months. How can we go on paying wages of almost Rs 2 crore (a month)?"
A letter written by the Jessop management to the state government - a copy of which has been seen by Business Standard - suggests the Ruias had made two proposals to salvage the plant. The options were between fixing production targets and downsizing the workforce. "After consultation with the workers' union, we proposed a manufacturing target of 15 road rollers and 4 locos per month. This was not even 10 per cent of the production capacity," said the letter sent by Jessop CEO Rajesh Agarwal to West Bengal Labour Minister Purnendu Bose. The second proposal, as recorded in the same letter, was to lay off workers. "If the first plan was not acceptable, 50 per cent of the workforce could be released after payment of their legal dues," the letter added.
To sort out the impasse, Bose called a meeting on October 30. It was attended by the labour unions and the Jessop management. Both the proposals were rejected by the union as well as the minister. Sources suggest this may have been prompted by Ruia's "apparent proximity" to the earlier Communist regime in the state. Bose, in fact, asked the Jessop management to shut down the factory if it was unable to run it with the full workforce. That is when the group wrote to Bose seeking permission to close the plant. "While rejecting the two proposals, you proposed that let the management declare closure of the company and pay the legitimate dues of the workers...reluctantly, in the given situation, we accept your proposal to declare closure of the factory and pay all the workers their legal dues," the letter said.
It is unlikely that the government will agree to the proposal. "We are not accepting the letter for Jessop's closure. We will be talking to all the parties involved. Things will be sorted out soon," Bose says. Ruia too has kept the door for negotiations open. "If the authorities provide the right environment, which will ensure minimum productivity, it is up to me to run the plant. Jessop still has a lot of opportunity and is sitting on orders of more than Rs 300 crore." The orders for coaches from state-owned Chittaranjan Locomotive Works and maintenance work at the Kolkata Port Trust could keep it running for the next six months.
Plenty of problems
In addition to labour problems which have dogged Jessop for several years, people in the wagon industry say "the entire sector is under pressure as orders have dried up". Jessop, they say, has a very small share of the wagon industry. "Even then, it has failed to deliver wagons on time on several occasions due to production issues," says an industry insider. "Still, the situation does not seem bad enough for a shutdown." Jessop's problems, to be sure, existed even before the recent labour issues emerged. Once a successful company, the tide began to change after it was nationalised in 1973. As the government went for disinvestment, Ruia took over 72 per cent stake in the sick unit in 2003 for Rs 18 crore. The workers protested the divestment, but the Calcutta High Court cleared it.
There were some signs of a turnaround within the first two years of the takeover, lending credibility to Ruia's reputation as a turnaround expert. "At the time we took over, the company was losing Rs 4 to 5 crore every month. The turnover was hardly Rs 30 to Rs 40 crore annually. From there, we took the annual turnover to about Rs 300 crore. It made profit within a year's time," he says. In 2010-11, Jessop recorded a net profit of Rs 23 crore on a turnover of Rs 300 crore. But it failed to keep the momentum going. For the March 2013 quarter, which is the last available financial result in the public domain, it recorded a turnover of Rs 61 crore without any net profit. The previous quarter (December 2012) too was similar with a turnover of Rs 63 crore and a profit of only Rs 1 crore. However, there was no loss on the books as of 31 March 2013.
There are contradictory versions from workers and promoters on what caused the downslide in the last two years. While the workers question the "intent" of the promoter, Ruia blames it on political machinations. "I am not a Communist Party of India (Marxist) or a Trinamool Congress man. But somehow there is a wrong perception among many that I do not have a good equation with the present (Trinamool Congress) government. This has adversely affected my business in the state," says Ruia. It is clear where the Trinamool Congress administration's sympathies lie. "Many workers believe Ruia does not want to run the factory. He is more interested in the real estate. I hope this not true. There will be a meeting on November 18, where we hope all these matters will come up," says a top official in the state labour department.
Ruia's flagship company Dunlop's Sahagunj plant too was closed recently and the tyre maker is contesting a winding-up order by the Calcutta High court. In such a scenario, whether a tripartite meeting and the state government's intervention would break the deadlock is a difficult guess. Until then, the conflicting versions of what caused Jessop's downfall are here to stay.
THE MANY FEATS
1788: Breen & Company is founded in Kolkata
1820: Henry and George, sons of William Jessop acquire Breen & Company on behalf of Butterfly Company established in Derbyshire, England, in 1790 by William Jessop. The two companies merge together to form Jessop & Company
1973: Company is nationalised and Jessop becomes a government of India undertaking
1986: Bharat Bhari Udyog Nigam Limited (BBUNL), a public sector holding company under the administrative control of the department of heavy industry, is formed. Jessop becomes a subsidiary of the holding company.
2003: Pawan Ruia takes over Jessop
2013: Management writes to West Bengal government proposing permanent closure of the Jessop plant from November 15
KEY MILESTONES OF JESSOP & CO
1815-1840: Built the country's first iron bridge over the Gomti at Lucknow
1819: First steam boat to sail over Indian waters was built
1890: Made the first steam road roller
1921-27: It was part of the team that built Parliament House in New Delhi
1937-1943: Made the first semi-balance cantilever bridge over the Hooghly, now the famous Howrah Bridge
1959: Built the first Electrical Multiple Unit coach for Indian Railways
1976: Built the country's first Caisson gates for Haldia Dock Project
1983: Made a container quay crane for Madras Port Trust
1993: Constructed the second Hooghly Bridge (it is a cable stay bridge - the first in India)
Source: company website
