Zuari-Maroc Phosphates, the new owner of Paradeep Phosphates Ltd (PPL), has allayed fears of a staff layoff in the company.
"Though PPL is saddled with surplus workers, we don't intend to retrench them," said K K Gupta who formally took charge as the new managing director of the company on Friday.
Instead, Gupta said, there will be redeployment of staff with a view to optimise their performance and efficiency.
"Retrenchment is the last thing in our mind." he said. On the other hand, with the company considering proposals to add capacity, redeployment of staff will not be a problem, he observed.
PPL, at present, has 2,800 workers, of which 1,600 are contract labours and 1,200 are permanent staff. The prospect of shouldering the burden of a large surplus workforce had made many bidders for the plant to dropout of the race.
Gupta said the company is committed to pay revised pay scale to the workers within 30 days. The revision of pay scale, due since Jan 1, 1997, was one of the main causes of unrest among the workers preceding disinvestment of PPL.
About payment of arrears, he said the company intends to reach an agreement with the employees' unions in 90 days. The total liability towards pay scale revision is estimated at around Rs 15 crore.
According to Gupta, the new management proposed to make a turnaround by 2003-04. Accumulated losses at PPL stood at Rs 431.50 crore as on March 31, 2001, and the company is expected to make a further loss of Rs 120 crore this year.
"If PPL does not earn profit by 2004, it will never," he added. The turnaround plan hinges on a three-pronged strategy.
In the first phase the company will beef up the existing facilities by focusing on removal of production bottlenecks, balancing of capacity, repair and maintenance and strengthening of marketing and man management set-up.
In the second phase the company will go for modernisation of certain equipment, while the third strategy will be to diversify the product range.
Gupta said the company has estimated an additional investment requirement of around Rs 200 crore in the next two years.
On the need of better marketing strategy, Gupta said, "Any move to add capacity has to be complemented with efforts to sell the product, otherwise the plant is bound to lose."
He said the unit was loosing under the previous management because of faulty policy, cash flow constraints and above all not being able to sell the product when the market required it.
The existing capacity of PPL is 7.2 lakh tonne of diammonium phosphates which may be expanded to over a million tonne soon.
Gupta said issues have to be addressed over maintaining steady supply of raw material to the company. The Morocco-based OCP had stopped supply of rock phosphates to the company after the latter had defaulted in payment.
But now with OCP having a stake in the company through its fully owned subsidiary Maroc Phosphates, with whom Zuari has formed a joint venture to take over PPL, the issues will be resolved in a amicable manner, he added.
The total liability of the company stands at around Rs 900 crore of which Rs 600 crore is due to the raw material suppliers and Rs 262 crore is in the form of government loan and unpaid interest. Meanwhile, the government has agreed to waive a part of the loan equivalent to the loss incurred by the company in 2001-02.
