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Wednesday, May 15, 2002

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SBI told to submit report on Jessop revival by June 15

Richa Mishra

NEW DELHI, May 14

STATE Bank of India (SBI), the operating agency (OA), for Jessop & Co Ltd, has been directed by the Board for Industrial and Financial Reconstruction (BIFR) to submit its report on the rehabilitation proposal by June 15.

The Bench observed during its recent hearing that a rehabilitation proposal involving disinvestment of the Government shareholding to a private sector player had been submitted to SBI. The proposal had, however, neither been examined by the OA nor had the OA given its comments on the disinvestment process adopted by Government, the Bench noted.

Further, trade unions had stated that the government was restructuring the dues of the company, repaying the secured loans of the company under a one-time settlement (OTS), reducing the staff strength and offering the company with a clean balance sheet to a private sector company. They were opposed to the privatisation of the company.

In view of this, BIFR directed the government and the company to provide full details of the procedure followed in inviting bids, offers received, method adopted in evaluating the bids, copy of valuation report to the OA. The OA is to then examine it and formulate a draft rehabilitation scheme (DRS) and circulate it by May 21.

This decision of BIFR, however, drew strong reaction from the Ministry of Disinvestment. Brushing aside the comments from the Disinvestment Ministry that BIFR was hampering the disinvestment procedures, senior officials of the board told Business Line that "it is not BIFR which is delaying the whole procedure.''

Recalling the sequence of events, the sources said that aggrieved by the order of BIFR to advertise for a change in management, the government had filed an appeal with Appellate Authority of Industrial & Financial Reconstruction (AAIFR).

AAIFR vide its order dated January 25, 2001 disposed of the appeal with the remarks that it did not see any reason to interfere with BIFR's order.

AAIFR had further directed the appellants to submit a rehabilitation proposal to BIFR by March 31, 2001. It was only vide its letter dated March 7 that the government had conveyed the approval of the competent authority for the proposal to induct a strategic partner in the company. The board had asked the OA to discuss it. The proposal submitted by government was discussed at a joint meeting held on March 27.

"Now if the Government itself takes a year to reach any decision, how does it expect BIFR to take up the matter immediately without taking note of the procedural requirements prescribed under SICA?'' sources asked.

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