Frequent cases of trespassing, theft of expensive machine parts, unconcerned police, militant trade unionism and poor productivity force a 225 year old heritage engineering company to the brink. The administration scales the peak of their ham-handed callousness. The owner calls the bluff and forces a stalemate, from which he “allegedly” hopes to emerge with a lean, mean and more efficient work force, en route to a “revival” that some say was enacted decades back, while others still wait for Godard. Allegations – from land grabbing ploys to putting politics above state and self – fly as if there is no tomorrow.
Is that all that is there in Jessop? Perhaps, but the whole sordid saga give rise to some very pertinent questions that yell out for answers, not only for the company, but also to act as an indicator as to which way the state and its industrial winds are blowing:
Q1. Is Pawan Kumar Ruia, the current owner of Jessop & Company eyeing the 71 acre prime land that houses the company’s factory in Dumdum? In retrospect, is the current imbroglio his way of forcing the hand of the unions to shut shop and free the land of all encumbrances? More importantly, is he really a wolf in a sheepish industrialist’s clothing as is being made out to be?
The facts don’t bear that out though. Pawan Kumar Ruia has consistently come out as someone who “believes” that with his superior management practices, can turn around sick and hemorrhaging units to put them back on the path to prosperity. He was successful in doing this with Jessop, within one year of his takeover which is etched there in the company’s Annual Reports for all to see. If it was the land that he was after, ab-initio, why would he wait for 10 long years since he took over to put his “grand design” in place? That too, after having sunk about INR300 crores in the company, for its “revival”?
Q2. Is Pawan Kumar Ruia, takeover tycoon, the man with the “Midas Touch” – a bubble that has burst?
It is a fact that Pawan Ruia chose the takeover route to build his empire – literally bid by bid. He’s won some, lost some, have achieved industry leader status with some and by the same coin, have stumbled and floundered at other places. Just like the God of Cricket cannot be expected to score a ton every time he goes into the middle, even Ruia cannot be expected to record a 100 percent strike rate. What makes him stand out from the crowd is his love for the game, his dedication, his obvious talent in matters turnaround and his dogged resolve to dig in, irrespective of whether the track of industrial environment spins or hurls one that swings the other way.
Jessop was taken over in 2003. It is 10 years since then and Ruia has seen 2 Prime Ministers in New Delhi apart from the GDP rate swinging like a pendulum from at the peak to the measly excuse of today. If he was a “bubble” then, he would not have successfully turned around Falcon Tyres and expanded its manufacturing capacity of its plant at Mysore by more than three times.
Just like companies do not turn “sick” overnight, they cannot be “turned around” by the blink of an eye either. This is more so in the context that often, the “bitter pill” that requires administration cannot be applied for various socio-political reasons. Ruia’s “failures” have to be seen in this light to give the man a fair chance, just like we give the Devil his due. A takeover situation is often a dead end, where entry is easy with no exit route. That Ruia entered into the fray knowing this is commendable enough, especially where the so-called “Angels” had and still fear to tread. It is now 8 years and he is still fighting it out in Sahagunje, Dunlop. Skeptics look at it as a “failure” conveniently overlooking the fact that more than INR 500 crores have been pumped into the company till date. Most of its liabilities have been settled and that the company is today on a much firmer ground than it was at any time since it started slipping. If that is a bubble, then Ruia must be some bubble blower.
Q3. Is Ruia a CPM man who is out to discredit the Government?
A politically affiliated industrialist is an oxymoron. Period. Can anyone in his right mind really believe that Pawan Ruia, or for that matter, any industrialist, spend INR 300 crores, just to spite the Government? Besides, if he was really that close to the erstwhile Left Front Government, why will he wait for a change of guard to bare his land grabbing fangs now? Surely he could have pulled his coup without any fuss had he chosen to during the earlier regime?
Q4. Is there more than what meets the eye in the whole sordid saga?
Mark the timing, coincidental as it may be. Here is one industrial group pulling no stops to “reinvent” itself by moving into the banking / financial services sector. At stake is a Banking License which may just be the ticket to tomorrow for Ruia. Naturally, the heat that is generated that emanates from Ruia’s calling the bluff in Jessop, seems a tad bit on the higher side and while it cannot be proven conclusively, sources close to the company vociferously allege dirty play by “vested interests” (read rival industrial groups). This coming close on the heels of “news items” of DRI questionnaires and alleged “investigations” on economic offences which add credence to what they claim are “a carefully orchestrated attempt to cast aspersion and obfuscate matters with an intention to malign”.
Q5. What now? What does the Jessop fiasco mean for the principal protagonist?
Pawan Kumar Ruia is a long term player. And despite the shrill posturing, I personally do not ascribe to the view that he is in any hurry to hang up his boots, especially in West Bengal. The Government too, will not “blink” as is being made out be. However, as the battle lines get drawn for what looks like a long and protracted standoff (and, yes, I write this after the tripartite meeting called by the Hon. Industries Minister), the immediate casualties will be the companies – which are facing steady erosion in the grounds on which they stand, irrevocably moving towards a point of no return – and the State of West Bengal’s image as one “friendly” and conducive to industrial activity.
First it was militant trade unionism unleashed by the communists leading to a flight of capital, followed by a prolonged period when nothing was done either to attract or to retain industries in the state. Now that the Ruling set has been replaced by a popular mandate and the new Rulers are keen to usher in the change that they represent, Ruia can be the most potent weapon in their scabbard. The Government and Pawan Ruia, both are poised to keep their respective trysts with destiny with Shahgunje of Dunlop and Dumdum of Jessop showing the way for turnarounds in particular and the industrial resurgence of the state in general.
Pawan Kumar Ruia, his detractors (and there are quite a few of them) claim, is a master of “managing the environment”. If he pulls this one off, and I for one will pray to God that he does, he may again swing the tables in his, and the state’s, favour. For that, he will certainly need more than a little bit of help and assistance from the Government (which, his camp point out, is the root cause, for “labeling” him as a “CPM man”). That the Government is above such “petty politicking” and has the best interest of the state in its heart does not need elaboration, as it will not risk sending out the wrong signals to the industry especially at a time when it is going on the overdrive to woo them back to the state. And this is what is giving Ruia, the state and local industrialists a solid reason to hope and look towards the future.
I was astonished to hear a wizened old expert refer to the Jessop imbroglio as the Ruia “endgame”. I beg to differ and am willing to put my money where my mouth is – far from being the end game, this is just the opening gambit!
Watch this space.
For More information on the group / companies mentioned: www.ruiagroup.co.in
You can follow me in twitter: https://twitter.com/CharmChawm