Phoenix Yule may give up investment proposal

Refusal of some workers to accept change hampers managements from running an enterprise in West Bengal and this is giving the state a bad name, according to the management of the Indo-German venture Phoenix Yule.

The conveyor belt manufacturer Phoenix Yule Limited, a joint venture between Phoenix CBS of Germany and Andrew Yule and Co Ltd, is facing such a problem and has all but decided to abandon its proposed investment in its West Bengal operations, admitted T K Mukherjee, the managing director of the company.

He told Business Standard that the response of a top management team from the German parent Phoenix CBS had been negative, after an assessment of the problem at its plant caused by some workers.

"Lack of freedom to operate independently within the permit of law and infrastructure advancement were enough to force us to re-assess the management decision regarding investing in the state," Mukherjee admitted.

The company is in the process of finalizing its plan of expanding its capacity by another 6,000 ton this year from current capacity of 10,000 ton.

This would require an investment of around Rs 30-50 crore, Mukherjee said.

Mukherjee pointed out that Haldia had been selected as the location for this investment.

"Phoenix would prefer West Bengal for the expansion but working conditions have to improve," added Mukherjee.

The company has already decided to reduce ongoing capital expenditure to Rs 2 crore from last years figure of Rs 5 crore at its existing Kalyani unit.

The company reported sales of Rs 125 crore in 2004 and expected 10 per cent growth in 2005, Mukherjee said.

The company sold almost exclusively to private companies as most public sector undertakings (PSU) had a very poor payment track record and also falwed procurement priorities that prevented purchase of high-quality belting, Mukherjee stated.

"Phoenix will be considering exports more seriously as it contributed 25-30 per cent of the business while the domestic market was getting saturated in textile conveyor belts," said Mukherjee.

Phoenix recently appointed ICRA Management Services to conduct a feasibility study to assess impact of the several free trade and regional trade agreements India inked recently.

"The impact on raw material imports, finished product exports and the threat of possible import of finished conveyor belt under the FTA and RTA pacts will be assessed," he added.