Pawan Kumar Ruia is a brave man - he had to be, as the man who bought out Kolkata's sick Jessop & Co from the Centre under the privatisation programme of the erstwhile National Democratic Alliance government, despite vociferous opposition from the Left Front government in West Bengal.

To his credit, Ruia has turned Jessop & Co around, confounding his detractors. Now, he has set his sight higher, seeking to buy out ailing tyre-maker Dunlop India Ltd from the Chhabria family, possibly through a deal sealed offshore.

Dunlop is just one of his targets - he has been negotiating for some time to take over the ailing West Bengal government-owned engineering units in the Durgapur region and alongside it some ailing secondary steel producers and foundries.

HC clears Jessop sale to Ruia Cotex   

That makes Ruia a man who is both brave and hugely ambitious.

He justifies his shopping list as part of a dream to build an engineering conglomerate with top-end engineering products based on steel, where he would control the entire value chain from steel production to engineered end-products.

The designs on Dunlop do not fit into this vision perfectly, but then the amazingly charming Ruia is a man who thinks on his feet. The other dream that Ruia chases is the one to buy big names. This trait explains his interest in Jessop, a blue-chip engineering multinational of yesteryears, or Dunlop, or nationalised companies like Babcock.

Ruia's confidence in his ability to swing the Dunlop deal may have received a temporary jolt following Jumbo's denial of any agreement on the transaction price, but his real problems lie ahead.

Ruia has powerful enemies even today despite his success at Jessop. Leading the pack is Left member of Parliament Gurudas Dasgupta, followed by former managers at Jessop.

They scoff at Jessop's turnaround, claiming that it represented mere financial re-engineering.

Jessop is looking to issue shares amounting to Rs 50 crore (Rs 500 million) to existing shareholders of the company at Re 1 each. The company, under Ruia's management since August 2003, made a net profit of Rs 4.82 crore (Rs 48.2 million) for FY 2004-05, but is burdened with accumulated losses of Rs 118 crore (Rs 1.18 billion).

This followed reduction of Jessop's paid-up capital with the consent of the Board for Industrial and Financial Reconstruction from Rs 10 to Re 1, reducing the paid-up capital of the company from Rs 95 crore (Rs 950 million) to Rs 9.5 crore (Rs 95 million), thus setting off Rs 85.5 crore (Rs 855 million) from the accumulated losses of the company.

The Rs 50 crore (Rs 500 million) from the 50 crore rights issue of shares of Re 1 each would raise paid-up capital to Rs 59.5 crore (Rs 595 million), making its net worth positive. The rights issue was blocked by the Appellate Authority of Industrial & Financial Reconstruction by an order on October 21, showing that there were regulatory issues to be cleared.

Ruia obtained a stay against the AAIFR order on October 31 from Justice Soumitra Sen of Calcutta high court.

"The AAIFR order will be stayed for a period of four weeks and all proceedings in the AAIFR will be stayed also," L L Agarwalla & Co, the solicitor and advocate of Jessop, said.

The letter was served on AAIFR in New Delhi, TitaghurWagons Ltd of Kolkata, and most interestingly, the Jessop & Co Ltd Staff Association and the Forum of Ex-officers of Jessop & Co, both based in Kolkata.

The problems from Left trade unions have been compounded by action against Ruia by the customs and excise department for benefits drawn against allegedly fraudulent export deals. The allegation has troubled Ruia several times in the form of raids and searches.

Even today, Left leaders scoff at Ruia's ability to buy any major company, given the condition of Jessop, the problems faced by his textile business and the lack of balance-sheet size.

It is these problems that Ruia must overcome if he is to build his empire using Jessop as the foundation for his dreams.

Jessop, on its part, is doing well - the railway ministry recently placed before it an order for nine rakes and promised to buy many more to cover its shortfall of around 2,000 coaches in this financial year.