Duncan's labour rift renews

Management assures no retrenchment, seeks police help

Duncan Industries' efforts to resume work at its fertiliser factory at Panki in Kanpur seem to be turning futile. The labour union there has hardened its stand against the cost-cutting measures proposed by the company.

The fertiliser division of the firm is lying closed since March 2002. The management has proposed under the new pricing scheme for urea, being implemented by the Centre since 2003, the firm will have to reduce its cost by Rs 42 crore per annum from the 2001-02 levels.

The company has planned a comprehensive cost-cutting strategy that includes pruning managerial costs as well.

The management has proposed outsourcing the packing operations, canteen facilities, and security functions; manpower restructuring; a six-day week; minimum overtime; making the retirement age 58 in a phased manner; and revised DA escalation rates and medical benefits.

The management has also assured the union that none of the changes proposed involves reduction in the existing salary or retrenchment.

However, the cost-cutting measures do include freezing fixed costs like salaries and wages, administrative overheads, social overheads, insurance, and marketing overheads like loading and unloading, handling, and warehousing at the 1999-2000 levels.

The company has communicated to the union that the "Indian industrial scene is full of examples where workmen have taken salary cuts and even accepted partial retrenchment in order to save the life of a unit. What we are proposing is none of this but only what is practised in all the 28 operating urea units in the country and in accordance with the laws of the land," said B M Ritolia, an executive.

Ritolia said the union had agreed to some of the proposed changes and had promised to resolve other issues. However, recently the union had hardened its attitude and conveyed to the management that the other changes were not acceptable to it, he added.

Managing Director V P Kaushik, while seeking help from the police in running the unit, has informed the UP labour commissioner he tried to resolve the issues but with little success. Some workmen were willing to accept the changes and resume work, but they were being held back through threats by the union, he added.

The manufacture and sale of urea are controlled by the central government. Urea sales to farmers are done at prices determined by the Centre and the difference between normative costs of production and sales is reimbursed to the manufacturer as subsidy.

The normative cost of production, too, is determined under the pricing policy by the Centre. The pricing parameters were revised by the Centre in November 2001.

The fertiliser unit defaulted in payment to Kesco (Kanpur Electric Supply Corporation) and Indian Oil Corporation. Power supply was disconnected on March 25, 2002, and the operations of the factory came to a halt.

The Uttar Pradesh government in December last year approved a relief and rehabilitation package for the unit by restructuring the outstanding loan of PICUP (Pradesh Industrial Corporation of UP) and the power dues of Kesco. This urea unit before the closure contributed 65 per cent of the revenues of Kesco.

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STANDOFF

• The management has proposed under the new 2003 pricing scheme for urea, to reduce its cost by Rs 42 crore per annum from the 2001-02 levels
• The company has planned a comprehensive cost-cutting strategy that includes pruning managerial costs as well
• The cost-cutting measures will include freezing fixed costs like salaries and wages, administrative overheads, etc.