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Govt clears closure of National Jute Manufactures Corporation, subsidiary

Press Trust of India  |  New Delhi 

The government Wednesday approved the closure of loss-making PSU National Manufactures Corporation (NJMC) and its subsidiary Birds & Exports Ltd (BJEL).

The decision was taken at a meeting of the chaired by here.

The decision will benefit the government exchequer in reducing recurring expenditure incurred in operating both the sick CPSEs in running their activities.

"The proposal will help in closing loss-making companies and ensuring release of valuable assets for productive use, or for generating financial resources for developmental progress," an official statement said.

BJEL has no staff and as the factory is not in operation; closure does not have any adverse implications, the government said in the statement.

The available land with both the CPSEs will be put up for public use/other government use for overall development of society.

The Disposal of fixed assets as well as current assets will be in accordance with the guidelines of the Department of and the proceeds from the sale of assets, after meeting the liabilities, will be deposited in Consolidated Fund of

In accordance with the norms, a (LMA) will be engaged for disposal of assets.

The LMA will be directed to carry out a thorough verification of the assets before undertaking their disposal in accordance with the DPE guidelines.

does not propose to use any land or for its own purposes or for any of its other CPSEs and the will be informed upfront accordingly, the statement said.

NJMC has been incurring losses for several years and was under reference to BIFR since 1993.

The company's primary product was hessian bags used for packaging of used by the various state governments.

Over the years, the demand for hessian bags has eroded and to that extent, it has been found to be no longer commercially viable to run the company, the statement said.

Mills of NJMC which were proposed for revival, namely, at Titagarh, and at Katihar are under suspension since August 2016. The last mill to be closed was on August 31, 2016 because of the failure of the to execute the job efficiently and problems with the local

labour.

The different models of outsourcing operations which were attempted have not been successful.

Looking at its past performance, market conditions and the competition from and the capacity of private jute mills, it was noted that NJMC would not be in a position to recoup its negative net worth through operational profits. Also, NJMC has no staff/workers on its rolls, the statement said.

BJEL, the subsidiary of NJMC, was referred to BIFR, which had considered a Revival Scheme. The Draft Revival Scheme could not be implemented because conversion of land use was not agreed to by the and the of the to the ASC was nominated after a three year delay.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, October 10 2018. 16:50 IST
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