PMINDIA

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the closure of National Jute Manufactures Corporation Ltd. (NJMC) and its subsidiary Birds Jute & Exports Ltd. (BJEL).

Procedure for Closure:

1. Disposal of fixed assets as well as current assets will be in accordance with the guidelines of DPE dated 14.06.2018 and the proceeds from the sale of assets, after meeting the liabilities, will be deposited in Consolidated Fund of India.

2. In accordance with the DPE guidelines dated 14.06.2018, a Land Management Agency (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.

3. Ministry of Textiles does not propose to use any land or building of BJEL for its own purposes or for any of its other CPSEs and the Land Management Agency will be informed upfront accordingly.

Benefits:

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.

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

Background:

1. NJMC has been incurring losses for several years and was under reference to BIFR since 1993. The company’s primary product was hessian jute bags used for packaging of food grain 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;

2. The Mills of NJMC which were proposed for revival, namely, Kinnison Mill at Titagarh, Khardah Mill at Khardah and RBHM Mill at Katihar are under suspension since August, 2016 (the last mill to be closed was Kinnison Jute Mill on 31.8.2016), because of the failure of the Job Contractor 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 plastics 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. Hence, the closure;

3. 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 West Bengal Government and the representative of the State Government to the ASC was nominated after a three year delay. BJEL has no staff and as the factory is not in operation; closure does not have any adverse implications.