State Government grants permission to Bon Ltd for closure of its Bombay Factory Undertaking at Sewri
27-07-2006 : The Labour Commissioner, Maharashtra has directed Bon Ltd, to pay current wages including DA and allowances to its workmen till their date of retirement without working, while granting permission for closure of Bombay Factory Undertaking at Sewri. The workers numbering about 900 will, on an average, be eligible to receive Rs 14.5 lakhs per person as VRS in monthly installments till normal retirement age of 60 years apart from PF, gratuity accumulated till date and leave encashment which will be on an average Rs 10 lakhs per worker. A large number of them had been idle for nearly two decades.
The erstwhile employer Hindustan Lever Ltd (HLL) had even offered to transfer the Bombay Factory undertaking to a cooperative of the workers for Re.1. Both HLL and Bon Ltd had also offered to relocate a part of the Undertaking to satellite units outside Mumbai but did not receive any positive response from the Union.
In line with the Order passed, Bon Ltd, a subsidiary of HLL has closed down its Bombay Factory Undertaking on and from July 26th, 2006. The workers will have time till 25th August, 2006 to avail of the aforesaid VRS offer directed by the State Government to be made available to them. Bon Ltd. will favourably consider such requests from workmen for VRS with the assistance of its Holding Company, HLL, provided these are within stipulated time and in conformity with the VRS notified to the workmen. The Government has also directed the Holding Company, HLL to help and assist Bon Ltd., its 100% subsidiary, to meet the closure costs and the VRS liability for workmen who avail of the VRS. The Undertaking had become unviable due to tremendous competitive pressure arising out of changed economic environment, locational disadvantages, exorbitantly high overheads, extensive litigation with labour and complete non-cooperation from the Union.
In the current scenario, it was also impossible to run the Undertaking at a loss of Rs 15 crores per annum despite best efforts. While the undertaking was facing tremendous competitive pressure and falling profitability, it could not carry a large number of idle workmen who were not contributing in any manner to creation of economic value nor were cooperating in any way. The Company is accountable not only to its workmen but also to its other stakeholders namely shareholders, customers and consumers. In the circumstances Bon Ltd clearly was left with no other alternative but to close down the establishment as per law.
It is clear from the above that in the present competitive context, both the workmen and the management ought to continually review the competitiveness of each undertaking and to adopt ways and means of enhancing viability, specially so in high cost centres such as Mumbai where operating margins will always be under pressure owing to higher wages, higher taxes, higher levies and outgoings. In such circumstances, the imposition of unjustified costs due to non-cooperation by the workmen, frequent work stoppages, antiquated labour practices and repetitive demands for unjustified increase in wages can prove fatal for the undertaking as has been the case for the Bombay factory undertaking of Bon.
