BHARAT ALUMINIUM
COMPANY & INDUSTRIAL
TURMOIL
PRESENTED BY
MANOJ KUMAR
ROLL NO. 17
PGEXP 2016
Genesis of Turmoil
DURING THE CASE STUDY VARIOUS ISSUES COVERING MANY FACETS OF
INDUSTRIALISATION & UNDER CURRENT OF WORKERS BEHAVIOR
PARTICULARLY WHEN THEY FIND THEMSELVES FELT CHEATED BECAUSE
OF LARGER POLICY DECISIONS WITHOUT CONSIDERING THE ISSUES
FACED BY ITS WORKERS, WHO IN REALITY RUN THE FACTORY & THEIR
SURVIVAL DEPENDENT UPON THE SURVIVAL OF ORGANIZATION:
This strategic sale was opposed tooth and nail by the BALCO
trade unions and the Left parties
The 7,000 strong workforce put up a stiff resistance through a continuous strike for
67 days after the sale of BALCO, which, apart from highlighting the shady deal,
symbolised their genuine apprehensions about their job security, sustenance of
existing terms and conditions of work as well as the future of local development in
the backward area of Korba in Chhattisgarh where BALCO is located
Insiders Story
In August 2006, CAG report no. 17 of 2006 affirmed in no uncertain terms that
BALCO was indeed grossly undervalued and now comes this well documented
study report from VVG NLI reconfirming the torrent of complaints from
thousands of suffering employees of BALCO about gross violations of labour
related clauses of the shareholders agreement between the government and
Sterlite.
The study was based on an analysis of both primary and secondary data. The
broader contextualization of the disinvestment of BALCO was attempted
through a detailed analysis of the available secondary information, and the
material available from the department of disinvestments, government of India.
Subsequently, the field work of the study was carried out in and around BALCO
Nagar, Korba, during February July 2005. The following sections of the report
substantiate the charges of gross violation of labour related clauses of share
holders agreement in letter and spirit.
From
detailed interviews with the VRS optees, it was evident that various modes of
coercion were engaged in implementing the VRS agenda by the new management.
Many of the respondents felt that they were forcefully dragged into the scheme,
though there was no open or direct threat from the management to accept the VRS.
A commonly used methodology was to prepare the workers to accept the VRS by
creating ambiguities and uncertainties.
According to some of the respondents, prior to the introduction of each VRS offer, the
management was resorting to many indirect pressurisation tactics at workplace, which
forced the workers to seriously think of leaving their job, whenever a suitable situation
comes.
An important strategy adopted by management was to humiliate the workers by
directly attacking their self-esteem and questioning their loyalty to the firm.
Many of the respondents suggested that one of the major considerations while
contemplating VRS was the demoralisation and trauma that they had experienced at
the workplace during the post-disinvestment period.
It was widely reported that Sterlite appointed some youngsters, who were given huge
salaries and positions, bypassing all the existing norms in recruitment. The major
qualification for these managerial staff was their proximity to Sterlite authorities.
A major reason for dissatisfaction of the VRS beneficiaries was the arbitrary decision of
the management to follow a deferred payment system, whereas the VRS compensation
amount is paid only in five installments with a gap of 6 months between each payment.
This act of the management is a departure from the standard procedure, as noted
earlier by the FFC.
Many of the retirees cited that this deferment of payment had created lots of problems
in future household planning.
Instances were cited where the retirees had to find out other sources of finance for
certain already committed heads of expenditure, in anticipation of the realisation of the
VRS amount in single payment.
It was also widely complained that while payment of ex-gratia was made in five
installments, all payable amounts and recoveries from the workers to the firm were
deducted from the first installment itself.
The wider impact of privatisation and VRS on the community and service providers to
the employees, as well as the local development of the area, was also studied in
detail. The report elaborates the following on this issue:
Another major concern that was addressed in the study was the impact of
privatisation on the development of the locality i.e., BALCO Nagar and the villages
around it. It was anticipated that the shift of management from the public sector to a
private strategic partner may lead to certain changes in the approach of the
management in addressing issues related to local level development.
This aspect assumes added importance, as all the public sector undertakings set up in
backward and developing regions (such as Korba) were specially known for their
concern for regional development in terms of provision of employment to local people,
creation and provision of basic amenities and services free of cost or at moderate /
subsidised rates (which include, water, sanitation, electricity, creation of roads and so
on).
In this line, BALCO, before the disinvestment, had a commendable track record of
contributing towards local development. A considerable share of the workforce in the
company was inducted from local people.
They pointed out the case of a new unit, which has been launched under the
aegis of Vedanta, a sister concern of BALCO, where a majority of the workers
inducted so far are non-locals
They also cited that the presence of workers from Chattisgarh is minimal
among the contract workers involved in this project as well as in the other
construction ventures in the locality. In the construction sites, the
contractors mostly engage migrant labour
The contractors are getting most of the workers from other states such as
Jharkhand, Orissa, Bihar, West Bengal and so on
They recounted that during earlier times, around 60-70 per cent of the
contract workers were selected from local areas, though the contractors
were often outsiders. Now, both the contractors and manual workers are
outsiders
The two schools located inside BALCO Nagar had been the major educational
institutions in the area, apart from a few government primary schools.
Due to the subsidised fee structure and other benefits available to the mostly within
the BALCO employees, the enrolment in these schools was mostly from within the
BALCO community.
Of late, due to the cumulative effect of several factors, there is a visible decline in the
school enrolment rates.
In the light of this development, the new management closed the junior wing of the
school functioning within BALCO Nagar (in 2004) and integrated the remaining
students and teachers to the Main School.
However, it was pointed out as really painful by many of the respondents that now
the company is using the junior school building as a warehouse/godown
New Developments
The local people increasingly feel that their township has become more alien to
them. The schools are unaffordable and getting closed; the hospitals are not meant
for local people; even entry of locals into the BALCO township area for vending or
petty business purpose are highly monitored and scrutinised.
The people also believe that the new management has no interest in maintaining
the green belt in the region and upgrading the public utility services in the region,
though development activities are being carried out for private use of the company
on emergency basis.
New Developments.
The present study by Dr. Babu P. Remesh has unmasked the ugly face of
privatisation of the public sector undertakings as a whole and BALCO in
particular
The report itself is a document which clearly exposes that M/s Sterlite and its
present holding company, M/s Vedanta have flagrantly violated all labour
clauses of the Shareholders Agreement in letter and spirit
This is a breach of the contract on which the unholy deal was finalised by the
NDA government. Does the UPA government possess the courage to cancel
the deal with Sri P.Chidambaram, the erstwhile Director in M/s Vedanta
Resources at the helm of its Cabinet?
More such studies should be conducted of the other companies which were
privatised during the NDA regime, like the Modern Foods, Centaur Hotels,
VSNL, Hindustan Teleprinters, etc. so that the social and economic costs of
privatisation are revealed in all their stark and brutal reality
No.
122
(+) 5936
111
(-) 2675
No profit or No loss
234
(+) 3261
57107
No.
54
551
241
100
Total number
946
24533
Year
Number of
Employees
(In million)
(Rs.)
1998-99
190.0
147482
1999-2000
180.6
168339
2000-2001
174.2
219546
consideration.
The existing service conditions of the employees are protected including any pension obligations which the company may be
having .
Mostly, past liabilities of the employees are settled prior to disinvestment.
In several cases, the strategic partner has also undertaken to meet past liabilities related to employees.
In many cases, where the employees favoured voluntary retirement before sale, liberal severance pay has been offered pre
privatisation.
At the beginning of the process itself, discussions are held with employees and all issues relating to service conditions, past
employees liabilities etc. are settled. These are fine tuned through further discussions as the disinvestment process proceeds.
Payment of past liabilities, VRS etc. do involve budgetary allocations by the Government which is worked out in consultation
before hand. That the Government has so far got high value for the companies sold, one of the reasons is perhaps this.
Thank You