DMT division executive director-in-charge PV Kuppuswamy told The Financial Express: "Militant labour, high cost of power, raw material and infrastructure facilities were making things difficult."

"Therefore, various cost-cutting measures are being discussed, including manpower reduction. The employees' union has submitted a charter of demands and the management is looking into it."

One retirement scheme, apparently broached with managers recently by the management, is believed to have offered three options to employees aged above 45, classified on the basis of years of experience. The options were:

* Managers aged above 45, with more than 10 years of service in the company, would be offered a separation sum equivalent to three timesthe product of the number of years served and their basic salary.

* Employees aged above 45, but with more than 10 years left of their service, would be offered twice the product of the number of years of service and basic salaries.

* Employees aged above 45, but with less than 10 years of service remaining, would be offered a sum equivalent to twice the product of basic salaries and the remaining number of service years.

According to company sources, the separation amount for each employee (for all categories) would not be more than Rs 2 lakh or Rs 3 lakh.

The Bombay Dyeing staff association members say, "The management cannot remove the employees with a separation scheme that doles out a paltry sum. If the company forces employees, then we will see to it that production comes to a standstill."

Of the total turnover of Rs 1,024 crore for 1997-98, the DMT division accounted for about Rs 378.8 crore, down from Rs 441.21 crore in the previous year. The DMT plant's rated annual capacity is 1.65 lakhtonne.

The division has passed through extremely difficult trading conditions caused by excessive dumping of PTA by south-east Asian countries. The domestic industry has also been hit by dumping of purified terepthalic acid (PTA), an alternative raw material to DMT, from south-east Asia. Bombay Dyeing's largest customers are Century Rayon, Garware, which are themselves passing through troubled times.

Though the government has imposed anti-dumping duty on PTA, Reliance Industries, the largest manufacturer of the product, has reduced its prices below that of the landed price, forcing Bombay Dyeing to reduce its prices.

Move will not benefit:

Bombay Dyeing's effort to reduce its manufacturing cost by announcing a taxable retirement scheme is unlikely to succeed, since one-third of the amount will go to the government's kitty. Even if the company manages to go ahead with the scheme, it is unlikely that its performance will improve. Reliance is eating away into Bombay Dyeing's market share,further, Garware is all set to commission its DMT plant, which will further take away a portion of its market. Moreover, with a reduction likely in line with falling paraxylene prices, there is little scope for the division in future.