Calcutta, Jan 29: CK Birla's Hindustan Motors Ltd has drawn up plans to retrench workers at its ailing Uttarpara unit, which manufactures the Ambassador car. According to the company, only lay-offs and retrenchments can save the Uttarpara unit, set up in 1947 and HM's oldest plant.The company had made the retrenchment proposal in a letter to West Bengal chief minister Jyoti Basu exactly a month before the government rejected its request for laying off the entire workforce for three days a week.
After the state rejected the lay-off, the company implemented a three-day week at its Uttarpara plant without reducing the wages.
Chairman CK Birla, in his letter to Basu on December 14 last year, had noted that urgent restructuring is required to sustain the operations. Birla said the current economic recession is likely to continue with another nine to 12 months.
Birla pointed out to Basu that the Uttarpara management has little choice but to initiate survival measures like lay-off and retrenchment. He said:"In the next few days, they [Uttarpara management] will also be applying for permission to retrench a part of the permanent workforce".
In a telephonic interview to The Financial Express, executive vice-president R Santhanam had said that 30 per cent of the current workforce of around 12,000 is a "good figure" for sustaining the operations at Uttarpara unit.
Annexures to Birla's letter cited several adverse factors that have forced the management to think of job cuts and layoffs. They are:
entry of foreign car-makers after economy was liberalised in 1993; adverse car-employee-year ratio at Uttarpara; high employee cost as a percentage of sales; Union government's agreement with the World Trade Organisation for complete removal of all quantitative restrictions on import of passenger cars.Birla said the Uttarpara plant survived due to infusion of additional resources through a Rs 53-crore rights issue and through sale of assets to make up for cash losses suffered during1991-93.
The annexure also noted that the Ambassador enjoys a competitive advantage due to its "uniqueness and enduring relevance". The company had embarked on a Rs 75 crore modernisation programme which was scheduled to be completed by December last year.
The plant has already suffered a loss of around Rs 11 crore between April and September last year. In addition to this, both production and sales have fallen to 1100 units from 2300 units earlier.
HC admits HM petition
Justice Pinaki Ghosh of the Calcutta high court on Friday admitted a writ petition filed by Hindustan Motors Ltd against the state government's rejection of its application requesting lay-offs at the Uttarpara unit. The case will come up for hearing again on February 12.
According to a company press release, Justice Ghosh has given the two recognised trade unions and the West Bengal government time till February 8, to file their affidavits.
The release said that the company has welcomed the stance taken by the unions andis willing to participate in discussions proposed by them since a long term issues are involved.
Company sources said that the number of applications have increased over the past few days.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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