The ailing Best and Crompton Engineering Co Ltd, about to be taken over by the Indonesian giant Polysindo, has sought the government's permission to retrench 130 employees, following the failure of its Voluntary Retirement Scheme.
The retrenchment would be confined to the objective of meeting Polysindo's pre-condition for the takeover, namely relieving 270 of the 430 employees of the company, said K V R Balakrishnan, director of the company.
He pointed out that only 142 employees had opted out under the latest round of Voluntary Retiring Scheme (VRS) ended on May 9, which offered a maximum of Rs 1.40 lakh per employee.
Meanwhile, the workers union of the company appealed to the management to reopen the VRS negotiations for a higher compensation, which it said, would attract all the remaining employees.
S Paramasivam, union leader, said the workers welcomed entry of Polysindo but wanted an assurance from the present management that the VRS amount would be paid to them immediately, particularly because those who opted out on VRS in 1994 and 1996 were yet to receive their settlements.
Polysindo has offered to inject Rs 103 crore into the company, which had accumulated losses of Rs 150 crore and is facing a winding-up petition filed by a group of creditors in the Madras High Court.
Even as the three-week suspension of operations at the company's units in Bangalore and Chennai entered its eleventh day yesterday, Paramasivam claimed that the State Labour Department had advised the management to immediately reopen the units.
However, Balakrishnan ruled out any review of supension before three weeks saying the funds position continued to be precariously low.
He said that the labour issue would be the deal-clincher for Polysindo, as the investor had made it clear that it is not going to have excess labour at the time of taking over.
While conceding that reopening the VRS scheme was possible during the 60-day pendency of the retrenchment petition, Balakrishnan said the package could not be improved any further.
Polysindo, which had agreed to meet not only the current VRS commitment but also the obligations under the earlier two rounds, had ruled out the possibility of offering more than what had already been offered.
In the likelihood of the VRS and retrenchment not coming through, Polysindo will withdraw its takeover offer, which will end any chance of reviving Best and Crompton, he added.
Balakrishnan admitted that the salaries for April were yet to be paid, but said he would be arranging for funds within two weeks at least to pay part of the salaries.
The company had raised some bills and the receivable were being pursued, he added.
But the larger issue of shedding excess labour was more crucial at this point of time, he said, urging workers to agree to the VRS proposal in the interest of the company.
He said all the pre-conditions of Polysindo were increasingly being met by various associates and excess labour remained the only hitch .
While the state government was likely to waive sales tax penalty dues, all financial institutions and many banks had agreed to waive interest dues, as required by Polysindo.
He said 75 per cent of the value of outstandings had been covered under interest waiver and the company had settlement proposals for over Rs 100 crore, which also provided for easy instalments.
The retrenchment application by Best and Crompton is likely to come up for hearing on Friday before the joint labour commissioner here.
