Forbes Gokak to cut spindlage, use VRS to turn around Swadeshi Mills
Sabarinath M
MUMBAI, December 28: The sole surviving Tatas-held textile company, Swadeshi Mills, is set for a new lease of life. The company has drawn up a proposal -- which awaits approval Bank of Baroda and its workers' unions -- to slash spindlage, its work force and to focus on processing and finished fabrics.The management of Forbes Gokak, through which the Tatas hold Swadeshi Mills, has devised a three-pronged strategy to put its ailing subsidiary back on track. A detailed plan was submitted to Bank of Baroda recently. The strategy includes the reduction of spindlage and looms, additional focus on processing and finished fabrics and reduction in work force. The implementation of the plan hinges on its acceptance by the Swadeshi Employees' Union, which has been at loggerheads with the management for quite some time now. "We have charted out this plan after taking into account the ground realities. We believe that the union will accept it in the best interests of the workers and the company," a top management
official said. As per the new plan, only one third of the spindlage and looms capacities will be continued, while the rest will be made non-functional. The company has a capacity of 15,000 spindles. The company's thrust will be on the restructuring of the processing and finished fabrics division by augmenting its capacity. The company is contemplating a drastic reduction in work force through a voluntary retirement scheme as soon as it comes to an agreement with the Swadeshi Employess Union. However, the extent of reduction through VRS from a gross size of 4,500 has not yet been decided upon, an official said. Mismanagement of working capital has been the major reason for the company's trouble, and it was merely serving as a conversion agent instead of boosting its own business, the official said. The effective use of working capital will be high on the agenda of the company, the offical said. The company needs Rs 7 crore to meet its working-capital requirements. The company will repay the loans
thorugh the development of its surplus land measuring 2.9 million square feet. Since the land is quite near the Bombay-Kurla highway, the company hopes to cash in on an expected increase in land prices. Meanwhile, the controvesy surrounding the shifting of 54 Swadeshi employees from Bombay House-the headquarters of Tatas -- has been resolved with the employees moving to nearby buildings. Initially, the employees were unwilling to shift from Bombay House citing lack of amenities in the new buildings. The employees have now decided to shift after the mangement agreed to put in place all the facilities available in the Bombay House. Swadeshi Mills reported a huge loss of Rs 12.89 crore in 1996-97, and the company is likely to repeat the performance in this financial year following the shutdown of its operations between April and June.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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