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BUSINESS:
EXIT SCHEME
Warning
Message
The
answer perhaps lies in a warning message in the notification which says
that ''those employees who do not opt for VSS ... shall be eligible for
retrenchment benefits under the Industrial Disputes Act (IDA)1947, or
under the terms of employment''. The IDA retrenchment entitles workers
to 15 days' salary for each completed year, though managers are paid just
three months' salary. ''The employees lost nerve due to fear of retrenchment,''
says Krishna Gopal Sharma, who signed off as assistant general manager.
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| "The
VSS worked because we made the package attractive." Shanta
Kumar, Union Food and Consumer Affairs Minister
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The Government's
''victory'' at HVOC is the second success of a VSS-led closure plan after
that of the India Road Construction Corporation (IRCC) last year. But
IRCC was a much smaller company with 154 people on its rolls at the end.
Closing the much larger HVOC, with huge land assets in Delhi, Mumbai and
other cities, will no doubt pep up the Government's efforts to plug the
continuous cash haemorrhage due to sick PSUs.
In many
of these, VSS offers could not lure the workers into quitting their jobs,
like in Indian Drugs and Pharmaceutical Limited in Delhi,
or the Tannery and Footwear Corporation in Kanpur. The sick PSUs cannot
be closed down at the drop of a hat because their workers are seldom convinced
that the Centre has the political courage to retrench them en masse. Under
the IDA, for retrenchment or closure, assent of the concerned state government
too is necessary. For the worker, that makes for a two-fold insurance.
However,
the VSS notice on HVOC was carefully worded as it merely stated that workers
failing to opt for the golden handshake would be eligible for ''retrenchment
benefits'' under the IDA. It did not hold out a threat of retrenchment,
not directly at least. Managers at HVOC maintain that the veiled threat
was enough to make the workers scurry for the escape hatch.
The incorporation
of HVOC in 1984, with the amalgamation of two sick private firms, Ganesh
Flour Mills and Amritsar Oil Works, is an example of warped thinking about
the role of the public sector even as the statist model had become stale.
The State Trading Corporation (STC) enjoyed at that time the monopoly
right to import edible oil, mainly unrefined palm oil. Since STC had no
infrastructure to refine and pack the oil for the public distribution
system, HVOC was created with this job as its sole mission. The company
inherited some marginal businesses from its private sector ancestors,
like making vanaspati oil and the Champion range of breakfast cereals.
But its core business was to pack, for the ration shops, the edible oil
imported by STC.
The New
Industrial Policy of July 1991 and the famous forex crisis of that year
witnessed delicensing of vanaspati manufacturing and drastic reduction
in edible oil import. Consequently, HVOC began to suffer cash losses year
after year since 1991-92. With STC's edible oil import monopoly ending,
it stopped oil import altogether in October last year. That rang the curtain
down on HVOC. The Vanaspati units, however, had ceased to operate even
earlier in the face of falling margins. The load of idle workers cost
the company around Rs 18 crore in wages last year. The accumulated losses
went on multiplying as a result.
The VSS
has put on the Government a burden of only Rs 34 crore. The full price
of the clean-out, including statutory payments like provident fund and
gratuity, is Rs 75 crore. This cost can be easily covered by the sale
of the valuable land at HVOC's disposal, worth Rs 600 crore by a modest
estimate. The handshake therefore could well have been more thickly gold-plated,
with the cost met from the proceeds of land sales.
However,
the moral of the HVOC saga is psychological. The workers, by losing the
battle of nerves, have put a question mark on the public sector still
being labour's impregnable fortress.
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