February 29, 2020
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Terminally Sick, Was The Verdict. Then...

Terminally Sick, Was The Verdict. Then...

IN the sea of West Bengal's industrial sickness lies a small island of hope: a steel-billet rolling factory in the sleepy Kalyani Industrial Area near Calcutta, where labour and management are forging a bond of cooperation to graow together. KR Steel-union Ltd (KRSL) went to the Board for Industrial and Financial Reconstruction (BIFR) in 1992 only to be written off as a dead loss.

KRSL has two more units in Kandla and in Kalve near Mum-bai. Says Vinaykumar Khem-chand, CMD of KRSL: "Our business was hit by the Bombay cyclone of 1989. Our profitable tinplate unit in Kalve was inundated and we lost over Rs 10 crore. The problem was compounded as we got only Rs 60 lakh as insurance. Worse, the banks cut our borrowing limit from Rs 72 crore to Rs 52 crore." Under the double whammy of natural calamity and axed lending limit, KRSL'S net worth—a healthy Rs 10.73 crore in 1989—was wiped out by 1992. The Kalyani unit had been making losses of Rs 2 crore to Rs 3 crore a year since 1983 thanks to an uneconomical melting furnace. Says Vinaykumar: "I felt that if we could close the furnace and shed some of the 150 jobs, we could turn the unit around." But the offer to lift the work suspension at the melting shop subject to a 25 per cent wage cut was rejected by the unions. In December 1993, the unit finally downed shutters.

Both unions, the CITU-affilia-ted KR Steel Employees Union (KRSEU) and the INTUC-affiliated KR Steel Sramik Karmachari Union (KRSSKU), now admit they were wrong to refuse the offer. Says Nishikanta Biswas, KRSEU general secretary: "As plant after plant began to close around us and our money ran out, we realised we had to change our attitude to save all our livelihoods."

Vinaykumar offered a 36-month austerity plan to reopen the unit: halving wages, forgoing the variable dearness allowance (VDA) to be compensated after two-and-a-half years, reorganisation of the workforce, increase in productivity, direct involvement of workers in the future of the unit, and all profits to be reinvested. Almost all the workers accepted the plan and KRSL reopened in March 1995.

It was a unique experience, says Kartik Bhowmik, KRSEU vice-president. "The workers were truly running the unit. Purchase, production, sales—all were under our control. Technically-qualified workers were promoted as supervisors." The enthusiasm led to a spurt in production: 6,000 tonnes a month against the earlier peak of 2,800 tonnes. No pay hike agitations, too. Says Niranjan Kusari, vice-president of KRSSKU: "The CMD has told us we should decide among ourselves how much should be paid out and what should be ploughed back."

Ironically, soon after it reopened, BIFR served the final windup order in April 1995. The unions moved the courts, and the order was quashed in 1997. Since then, the unit's performance has disproved the worth of the banks' assessment. In the year of reopening—1995-96—its profit was Rs 1.12 crore, rising to Rs 3.43 crore in 1997-98. The old terms of pay and VDA have been reinstated and Vinay-kumar is hopeful of a healthy profit in 1999-2000. But lack of capital continues to bedevil the unit. Talks are on with the banks for a one-time settlement of Rs 15 crore. Says the 50-year-old CMD: "Already, our products are selling at a premium because of its superior quality. And once the problem with the banks is over, I intend to diversify.The experience of reviving this unit has enriched me."

But can KRSL be taken as a model for management-worker cooperation in reopening units? Says Chittabrata Majumdar, CITU general secretary: "This model cannot be applied to all sick units. The problems—and management styles—of each industry and unit are separate." The unemployed may not share such despondency. Says Kusari: "When a jobless worker commits suicide, it draws media attention and stirs all politicians into action. But with a timely effort to reopen the factory, the suicides could have been avoided." Is the workers' state listening?

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