The agitation was unconditionally suspended following deliberations the Gujarat government's labour department had with the management and representatives of the three major trade unions on October 17th.

The unions, sources said, have conveyed their decision to suspend the agitation to the management on October 18th.

Though what transpired at the meeting was not known, the workers' union had not withdrawn the strike but suspended it, an IPCL source said.

Nearly 70 per cent of the workers abstained from work on October 16 as the management was willing to give only Rs 3,000 as gift amount compared with Rs 5,500 last year. They also blocked the roads leading to the company's complex in Baroda. However, all the plants functioned normally.

Depressed market conditionscoupled with a fall in profits forced the management to reduce the payment. The company has set certain conditions for the payment of gift amount and it will be in proportion to the profits, IPCL sources said.

The corporation has three major workers' unions led by BMS, CITU and INTUC. During the first quarter of 1998-99, the company incurred a loss of Rs 56.67 crore owing to a depression in the petrochemical industry and a prolonged shut down at its Nagothane plant. It earned a profit of Rs 244 crore in 1997-98. IPCL has three plants, two at Baroda and Gandhar in Gujarat and one at Nagothane in Maharashtra.

The reduction in gift amount is believed to be part of the larger cost-cutting exercise that IPCL is implementing. The exercise became inevitable after it reported losses in the first quarter of the current financial year.

Unit trust of India, which recently conducted a study of IPCL's operations, has observed that the corporation's problems are linked to government controls and only privatisationwill make it more competitive. UTI is a major stakeholder in IPCL as it had purchased a large chunk of shares when the centre went in for a packaged divestment of PSU shares in 1992. It is believed that UTI's stake in IPCL is close to 20 per cent.