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Wagon maker Jessop & Company reinvents itself, and gets back on the rails. By Ritwik Mukherjee Phoenix, the mythical bird, is its insignia. And the 217-year-old Jessop & Company, over the last three years or so, seems to have enacted how Phoenix rises from its ashes! And none would have possibly known the man at the helm of these affairs if he had not bought this mammoth public sector for a paltry sum of Rs 18.80 crore. Pawan Kumar Ruia (46), a qualified chartered accountant by training, hailing from the family of little known Ruias of Kolkata, has brought the leading wagon maker back on rails. The future of Jessop looks more promising with Board for Industrial and Financial Reconstruction (BIFR) recently allowing the once written-off company to reduce its capital base and go for a rights issue. Jessop's current capital base of Rs 95 crore is being brought down to Rs 9.5 crore. The accumulated loss of Rs 118 crore will thereby come down to Rs 33 crore The company plans a fresh capital infusion of Rs 50 crore through the rights issue. The new capital base post rights issue will therefore be Rs 59.50 crore, helping the company reach positive net worth. The company will also be out of the purview of BIFR. The fresh funds infusion will also take care of the company's working capital requirement. The company has drawn up a capex of Rs 30 crore over the next couple of years. Working capital requirement in this period would be Rs 70 crore while non-funds base requirement would be Rs 50 crore. Ruia, Chairman of Jessop in its new avatar, says if the government doesn't subscribe to this, his company will buy that over. And in such an eventuality, Ruias' stake in Jessop would go up by 10-15 per cent from the current level of 72 per cent. However, as per the Shareholders Agreement (SHA), after August 29, 2006, the remaining 27 per cent stake, which the government holds presently, will automatically come to the Ruias anyway. Ruia, who often finds solace in a rare collection of paintings by Nandalal Bose, Jamini Roy, Prakash Karmakar, Dipali Bhattacharya, Dhiraj Chowdhury and Ramananda Bandyopadhyay, himself has carefully portrayed a bright picture of a company he took over little over three years ago amid various pulls, pressures and controversies. Jessop, which had gone into the BIFR fold after chronic losses, has not only come out of the red, but has earned a net profit of Rs 4.82 crore in 2004-05, its maiden profit in 15 years. Ruia says, "This is a significant step forward as even in 2003-04 there was a net loss of Rs 6.38 crore. The turnover of the company has also shot up to Rs 76.96 crore from a 2003-04 level of Rs 46.36 crore. "Our (the Ruia Group's) association with Jessop has demonstrated that the company has built a business model that does deliver strong financial results, even without robust environmental conditions - and one that can capitalise quickly on market opportunities." But what is this business model? If teamwork, sharing and pooling of collective knowledge and experience formed one important facet of this model, the other crucial aspect is strengthening and revamping of the marketing arm. The marketing division has been revamped with the sole objective of creating interest in Jessop and its products among customers and potential customers. Branch offices have been put up in Ahmedabad, Chennai, Hyderabad, Bangalore and at steel plant locations like Bokaro, Rourkela, Jemshedpur, Bhilai and Visakhapatnam, to reach out to customers as well as to enable the clients reach the company. And these initiatives are paying off. Orders are being received on a regular basis from steel majors, Indian railways, from China, Bangladesh, and Myanmar. Jessop's construction initiatives have made their presence felt at Haldia Dock Complex and Park Street Flyover. As many as 262 VU wagons and 33 EMU coaches have been produced in the factory and delivered, which was a record of its kind. These apart, four road rollers were sent to Bangladesh and an export order for life cycle test on powered roof support was successfully accomplished. To back up this growth the nearly dying company has made an infusion of fresh blood. Campus recruitments were made from reputed B-Schools, engineering colleges and polytechnics, a thing unheard of during its long tenure as a PSU. As many as 31 highly qualified professionals have been taken in to add strength to Team Jessop. Ruia also attributes this turnaround to another key factor. "Business is all about change and evolution. We are therefore changing our focus from being an engineer to becoming a complete solutions provider. We are relentlessly innovating and leveraging Jessop's inherent strengths. We have also started foraying into diverse emerging areas, unlocking the company's latent strength," Ruia says. And accordingly the company has teamed up with Singapore-based Boustead Group to offer turnkey solutions in hydrocarbon, power, environmental and process instrumentation and Antara Koh Pte Ltd, another Singapore-based firm, for foraying into the area of port and jetty building. The Kolkata-based heavy engineering giant has also joined hands with Tekhkom of Ukraine for getting into shipbuilding and repairing and with Mackenzie Hydrocarbons, an Australian engineering major, to meet the requirements of the oil and natural gas sector. Beside the four, Jessop has entered into technological partnership with Global Map Services of Singapore for specialised consultancy services in the area of port & shipping and with Salcol of Singapore for water and environmental engineering. "Our leap has taken us beyond boundaries, beyond barriers," Ruia says. And this new journey, as the Jessop Chairman points out, began with simpler things in life - buildings were repaired and painted, unutilised plants were refurbished and brought into usable condition, intensive efforts were made in areas of housekeeping and upkeep of assets, workers were given uniforms, cleaner, safer and more congenial work environment was ensured. "We could successfully impress on the employees that we provide an organisation and operating environment that attracts, nurtures, stimulates and rewards employees, professionalism and creativity," says Ruia. Having set the house in order, it's time to look forward. And Jessop under Ruia's stewardship has already started looking forward. Ruia often recalls what the redoubtable Henry Ford once said, "When everything seems to be going against you, remember that the airplane takes off against the wind, not with it." And Jessop has truly taken off, recreating what Ford said.
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