The Pantnagar factory is a crucial link in Nestle India’s supply chain.
The Udham Singh Nagar district authorities today started renewed efforts to end the fortnight-long strike by workers of Nestle India’s plant in Pantnagar, Uttarakhand.
The factory employs around 650 workers. The company’s stock today closed at Rs 1,722, down 1.44 per cent, on the Bombay Stock Exchange (BSE).
The talks were on till late evening. The factory mainly produces food items like Maggi noodles. “We are expecting a positive response,” said Assistant Labour Commissioner Vipin Kumar, who has been trying hard to find a negotiated solution to the standoff.
The strike was triggered by the removal of two probationers on April 27 over performance. On May 1, Kumar called a meeting of the management and the striking employees and settled the issue. But the next day, the Nestle management allegedly suspended four more workers, forcing the employees to go on an indefinite strike. The workers have been on strike since May 2, due to which the work has come to a halt, according to Kumar.
Terming the strike as “illegal and unjustified”, a Nestle official said the company was taking steps to restart work. The official said the strike had not made any dent on the production front so far but sought the help of the district administration to resolve the issue.
“The workers of the company’s factory at Pantnagar have resorted to an illegal and unjustified strike relating to disciplinary action taken by the company against a few workers,” Nestle India said in a regulatory filing to the BSE.
Nestle had set up the factory to benefit from a slew of tax incentives under a special industrial package for hill states.
“The workers at this plant receive wages and benefits that are among the highest in the region. Nestle continuously benchmarks itself against other industries in regions where it operates and is acknowledged among the best employers,” a Nestle India spokesperson told Business Standard.
The Pantnagar factory is a crucial link in Nestle India’s supply chain. While commissioning the plant, the company had said that it would invest over Rs 100 crore in the factory. Nestle India’s profit from operations for calendar year 2008 rose 24.1 per cent due to scale. Staggered price increases and cost-optimisation initiatives contributed to offset the steep rise in prices of commodities like milk solids, green coffee, fuels and vegetable fat. Its net profit rose 29.1 per cent over 2007 with margin improving to 12.3 per cent from 11.8 per cent. This was positively influenced by the tax holiday enjoyed by the Pantnagar plant for the full financial year ended March 31, 2008.
Nestle’s first investment was in Moga (Punjab) in 1961. It set up its next factory at Choladi (Tamil Nadu) in 1967 as a pilot to process the tea grown in the area into soluble tea. The Nanjangud factory (Karnataka) became operational in 1989 and the Samalkha (Haryana) factory in 1993. In 1995 and 1997, Nestlé commissioned two factories in Goa, at Ponda and Bicholim, respectively.
“The impact (of the strike) will be minimal if the issue is resolved soon as the company will have enough inventory to see it through,” said Anand Shah, sector expert with Angel Broking.
