Voltas, labour union cut a deal

Voltas, the diversified Tata group company which has been grappling with labour problems for years, has finally reached a settlement with the employees' union on various issues.

Both the management and the union have agreed to withdraw all pending cases from the court as well. This is a landmark achievement for Voltas which had a strained relation with the union for quite some years.

After the company reported its first loss in 1996-97, the management had decided to cut jobs through a voluntary retirement scheme (VRS), a move strongly opposed by the union.

As part of the ongoing restructuring, the company plans to further downsize its workforce. Around 600 surplus workers are expected to be axed through the new VRS in fiscal 2003-04.

A company official said, "The union has agreed to support the management in improving productivity and backed the current VRS scheme."

The company has 3,900 employees at present. "This is the last leg of our restructuring and there won't be any further VRS," the official said.

The average outgo per employee would be between Rs 4 lakh and Rs 6 lakh. The company has recently announced a VRS and has targetted around 300 employees.

It also plans a separate VRS at its Hyderabad facility that has around 1,700 employees. The company is also considering selling the Hyderabad unit if it gets a good buyer.

Also, Voltas that has struck an outsourcing deal with Samsung Electronics India last year has seen negligible offtake of direct cool refrigerators from the Korean major during the September quarter this year.

Because of this, the turnover contribution of the Hyderabad facility that manufactures refrigerators has come down significantly.

The company intends to reduce its dependence on contract manufacturing and focus on manufacturing of its own products.

LG Electronics' contract with Voltas for sourcing refrigerators has also expired, with LG setting up its own facility.

The company has also shifted the production of water coolers from its Dadra facility to the Hyderabad.