The Orissa government has issued notice to Kolkata-based Varsha Fabric Pvt Ltd (VFPL), a Ruia group company, to take steps for running Hirakud Industrial Works Ltd (HIWL) in the state within a month’s time or it would cancel the share purchase agreement (SPA).
VFPL acquired HIWL, a unit of state government-owned Industrial Development Corp of Orissa Ltd (IDCOL), in 2006 for Rs 5.25 crore.
The notice has been given following the decision of the state Cabinet Committee on Disinvestment (CCD), chaired by chief minister Naveen Patnaik. CCD, however, has asked a team of top officials comprising chief secretary Ajit Kumar Tripathy, finance secretary RN Senapati, public enterprise secretary BK Patnaik, and industries secretary AK Padhi, to discuss the matter with the company and also the employees’ union within 15 days to remove the hurdles for running the unit.
CCD decided to take action against the company as it did not implement court directives and violated agreements.
The Ruia group company, in fact, failed in keeping its promises made to the state government on revival of the unit. It did not implement a tripartite agreement signed among IDCOL, employees’ union, and the company following a court directive.
The employees of HIWL have not received their salary, provident fund, and medical fees for the last 26 months, as VFPL is not paying according to the agreement.
Sources said the law department had also suggested that the state government should approach the court for cancellation of the SPA. Besides, the public & co-operative enterprises restructuring committee, headed by chief secretary Ajit Kumar Tripathy, too recommended at its meeting on July 15, 2008 that the SPA should be cancelled.
HIWL is a fabricating unit having facilities to fabricate and erect galvanized EHT power towers and substations structures.
It was under the state government’s disinvestment policy that the IDCOL unit was put on the auction board in February 2003. Even though VFPL emerged as the highest bidder, the acquisition was delayed by three years owing to prolonged legal tangles arising out of several court cases filed by lenders and employees’ unions.