The contemporary corporate observers in India are perturbed by the increasing incidence of industrial sickness. The magnitude of corporate sickness has evoked
considerable public concern and media attention. The
number of sick units as of December 1990 is estimated
to have reached a staggering figure of 3.46 lakh. Also, a
large number of sick units have been found to be nonviable. The ratio of viable to non-viable units is 1:16 in
1990. Sickness is more pronounced in the private sector
especially the small scale sector. Of late, however, many
public sector units have also turned sick. Out of a total
of 244 public sector undertakings, 98 are loss making
units with an accumulated loss of Rs 10052.8 crore. Out
of these 98 units, 58 are identified as chronically sick
units with an accumulated loss of Rs 8536.76 crore.
These units are on the brink of winding up (Mehta,
1992).
The responsibility for evolving suitable action
plans to revive and turn around the sick unit lies as
much on the employer as it is incumbent upon the
government. It is also equally important that labour be
assigned an important role in the process. We have
many instances in recent years of workers bearing the
burden of turnaround and on many occasions successfully performing this role.
This paper is an attempt to examine the role of a
workers' cooperative in the turnaround of a sick
enterprise based on the turnaround experience of
Kamani Tubes Limited (KTL). Experiences of other
workers' cooperatives in our country are also highlighted to provide the backdrop (Box 1).
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functional specialization, division of activities, formation of new work groups, allocation of responsibilities, and ensuring group cohesion. In the initial
stages, the enterprise tends to be under managed in
terms of quantity and quality especially in critical
areas of production, finance, and marketing. This
situation arises due to the managerial vacuum
created by the exodus of key persons who seek
alternative placements in more prosperous organizations. Under workers' regime, the enterprise
often finds it difficult to recruit from external
market new managers who are competent as well
as sympathetic to the aspirations of workers and
who are ready to manage the new organization in
a democratic and participatory manner.
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(Chairman), Works Manager, Plant Manager, Production Manager, Materials Manager, Quality Control
Manager, Personnel Officer, two representatives of
KEU, three workmen representatives from the shopfloor, and one staff representative.
The functions of PLC which met in the first week of
every month, included monitoring day-to-day working
of the plant, supervising the progress of work, and
ensuring achievement of production targets. The scope
of PLC was restricted to the operational and personnel
aspects of the plant; the commercial aspects were kept
outside its purview.
Immediate Tasks after Takeover
After takeover, the Managing Director identified the
following tasks as critical and initiated suitable steps
accordingly:
streamlining personnel.
As a departure from the earlier practice, the supervisors were advised to devote a major part of their time
in product development and quality improvement instead of routine supervision. Further, a set of 20
workmen were chosen to become group leaders who,
in addition to attending to their own machine, helped
in supervision work. The need for routine supervision
was gradually de-emphasized. Contrary to the earlier
practice, the number of peons was reduced from 15 to
five. The peons were assigned the tasks of filing,
despatch, and other routine clerical work. By this step,
KTL was able to rationalize manpower at the lowest
level and improve the morale of the peons.
Marketing and Product Development
Two important areas in which KTL laid special emphasis were the formulation of a marketing strategy
and development of new products. In the meetings of
the Board of Directors, the Chairman emphasized the
urgency of evolving a clear and definite marketing
policy at KTL and also observed that the company's
excessive dependence on sugar tubes was not likely to
fetch sustained profits. He, therefore, felt it was high
time the emphasis was shifted to developing new
products. KTL had identified two products for
development: brass wires in ball pen industry and finning quality copper tubes for air-conditioning and
refrigeration industries.
Training and Orientation
In order to elicit appropriate response from workmen
and motivate them to put in their best, it was felt that
upgrading of workers' technical knowledge and skills
would be necessary. Accordingly, a series of training
programmes for the workers were organized which
were conducted by a professional body. The main objective of training was to make the workmen understand and comprehend the overall framework of
managing the manufacturing organization. The
programme focused on: principles of economic theory
and finance, principles of work method and value engineering, and principles of management.
Role of KEU
In the context of workers' management and ownership,
the role and functions of trade unions assume new
dimensions. The KTL experience suggests that KEU
had undergone a role reversal from a conflict model to
that of cooperation. KEU had also enlarged its role to
encompass the welfare of workers' family and children.
In the new situation, the role ascribed to KEU was that
of a vigilant organization which would put appropriate
checks on undesirable management practices. The col19
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Conclusions
The KTL experience lends credence to the argument
that in the event of increasing sickness and closure of
an enterprise, a viable alternative of restructuring
would be to allow workers to form cooperatives and
provide necessary financial and infrastructure support
to enable them turn around the enterprise. The factors
which contributed to KTL's turnaround are both internal arid external which can be summarized as follows:
Internal
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References
Bhowmik, Sharit Kumar (1988a). "Ideology and the Cooperative Movement: Workers Cooperatives in the Tea Industry/' Economic and Political Weekly, Vol XXIII No 51,
December 17, pp 2703-2708.
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