Confirming this today, managing director M L Shekhawat said the retrenchment process had already begun. ``We have approached labour commissioner A D Kulkarni and notices have been sent from his office to 120 workers who we plan to lay off in the first phase. All of them are office staff,'' he pointed out.

The president (works) K Vaidyanathan explained the company has been suffering losses of Rs 3.5 crore a month this financial year. ``We were hoping for a jump in sales during Diwali, that would have seen us out of this difficult situation. But, unlike the trend every year, sales did not pick up even during festival season. We have accumulated losses of around Rs 11 crore to date,'' he explained.

Inside sources said the company, which owned property in theEros theatre building, sold it for Rs 5 crore last year. ``That's how the balance sheet showed a profit of Rs 1 crore,'' pointed out an official not wishing to be named.

Asked why the company wasn't resorting to other cost-cutting measures, Vaidyanthan said: ``We have already put in place cost-cutting measures in production by way of modifications on the shop floor.'' The company has also invested in its own diesel power generation plant which will be commissioned by March 1999. ``Since we'll be getting power supply at around Rs 2.00 per unit as against the Rs 4.00 per unit charged by MSEB, it will add to our bottom line,'' he informed.

He, however, said in spite of all these measures the company would not break even and continue to make losses to the tune of Rs 50 lakh per month. ``If it goes on like this, it won't be long before the company is taken over by the Board for Industrial and Financial Reconstruction (BIFR). We had to think if the entire 6,500-strong workforce could be allowed to be affectedto save 400 workers.''

He also justifed the decision to axe the office staff first and pooh-poohed the suggestion that the management was wary of touching workers because of the company's turbulent past in industrial relations. (The workers had fatally attacked the then MD K Buddhiraja and GM Mukund Bhalerao on October 27 last year over being paid lesser bonus than what was being demanded.) ``The next phase of retrenchment will definitely include workers,'' pointed out Vaidyanthan, who didn't rule out the possibility of some top executives too losing their job.

The office staff, who have their own NRC Employees Union are, however, unhappy with their leader S R Kulkarni for not taking cognisance of what's happening. When contacted by Express Newsline, Kulkarni claimed he wast not in the know of things and said he would ``soon make enquiries to find out what's going on.'' The workers, meanwhile, have begun parleys with the Maharashtra General Kamgar Union (MGKU). ``Though officially it's up toKulkarni to do something, we'll back the staff fully and fight the decision tooth and nail,'' said Dada Samant, who heads MGKU.