In only a second such instance where a brokerage house reached out to striking workers, Jignesh Kamani, research analyst at Nirmal Bang Institutional Equities, spoke to Yashpal Jaiswal, workers’ union leader at Arvind, in a conference call.
With 3,500 workers at Arvind Ltd’s denim manufacturing unit at Naroda in Ahmedabad on strike for the ninth day on Tuesday, Kamani said the company may see an eight per cent decline in its net profit projections for 2012-13. The workers are demanding a 40 per cent wage rise.
He spoke on behalf of the company’s institutional investors and said, “Based on back-of-the-envelope calculations, if the strike continues for 10 more days, there may be a one per cent decline in consolidated revenue projection for FY13E, but it could impact operating profit and net profit by four per cent and eight per cent, respectively, because of high operating/financial leverage.”
In October, Haryana government mediators had spoken to the striking workers at Maruti Suzuki to break the deadlock.
Arvind mill workers are on strike since June 4.
According to Kamani, total employee costs for Arvind stood at Rs 4,51.4 crore, or 9.2 per cent of 2011-12 sales. “Assuming average salary of Rs 6,000 per month, if 4,000 workers are given 40 per cent rise, then employee costs would rise 6.4 per cent, or by Rs 28.8 crore, in FY13E and impact operating margin by 55 basis points,” he added.
At present, workers at Arvind’s Naroda unit get an average salary of Rs 5,000-7,000 per month.
The production at Naroda unit has been completely shut and is impacting the company’s total production by 60 per cent. The unit produces 84 million metres (out of a total of 108) of denim fabric, contributing 37 per cent to consolidated revenue in 2011-12.
On Friday, workers along with Arvind management and representatives of Textile Labour Association had met the local labour department. “In the meeting with the labour commissioner, the Arvind management had asked us to resume work and had assured a wage rise after six months. However, we would continue our strike until our demands are met immediately. We are also prepared to go on a fast to stress our demands,” said Jaiswal, adding that the workers will refrain from any violence.
The management, on Sunday, in a public appeal published in local newspapers, had alleged that despite the assurance to implement wage rise within six months, the workers were adamant with their demand.
Nirmal Bang at Maruti last year
Nirmal Bang Institutional Equities, the Mumbai-based brokerage house which organised a conference call with the striking workers at Arvind mill in Naroda, had also initiated investors-workers conference call during the last year’s workers’ strike at Maruti Suzuki’s manufacturing facility in Manesar.
