Financial Daily from THE HINDU group of publications
Wednesday, Jul 14, 2004
Indal's Kerala unit on the verge of closure
Kochi , July 13
INDIAN Aluminium Company Ltd (Indal), the Aditya Birla group company located at nearby Eloor, might face closure due to high cost of power and the "un-conducive" attitude of the workers.
The management had shut down the smelter unit on August 1 last year due to high power cost and asked its 326 employees to stay at home as the concession on power charges extended to the company by the State Government had expired early last year.
The company's decision to purchase power directly from Power Trading Corporation (PTC) had also reached a stalemate following increase in the power tariff by PTC.
Thus, for about a year, the smelter unit has not been functioning and the only unit that has been operational is the extrusion plant, which employs over 100 staff.
As the employees of this plant had gone on strike on July 1 demanding higher wages, this has also been closed and its 103 workers have been asked to stay at home.
Some of the trade union leaders are of the opinion that when uncertainty hovers over the future of the unit due to the stalemate in getting power at a moderate rate, the strike by the employees of the extrusion plant "has come at a wrong time".
They said that all the unions have been with the management to find a solution to make power available to the company at affordable rates. The trade union leaders fear that the management might close down the unit, citing "untimely strike" as a reason instead of the power crisis.
At a meeting of the trade unions and the management convened by the Labour Commissioner last month on long-term wages settlement, the management had agreed to an increase in wages up to certain levels, which was not acceptable to the unions, senior management sources told Business Line on Monday.
Another meeting was held on July 3 in which the union leaders did not turn up, they said. "The management has got a lot of constraints and hence the demand could not be accepted."
As the workers had struck work and obstructed movement of finished products, the company started losing its customers, they alleged. "As a result, there is virtually no activity inside the company."
The strike, which has come at a time when the management has been working on finding a solution to the power crisis, has become a setback to the whole effort, they said.
"The attitude is not conducive to anything except dampening the efforts to revive the company. We already had some discussions with PTC for drawing power from it, but the strike has torpedoed it."
They said that the PTC had agreed about a year back to supply power at Rs 2.50 per unit, based on which the company had sought permission of the Kerala State Electricity Regulatory Commission (KSERC) to draw power from PTC, which was granted early this year.
"But now the corporation has made some changes in power tariff. At that point we were not able to enter into a contract with it. Therefore, re-opening of the smelter unit depends on the availability of power at affordable rates. Uncertainty still remains."
According to the management sources, the company was a major consumer of power at 20 million units per month and at the current power tariff, the unit cannot be run profitably and it has become economically unviable.
Closure of the unit would render hundreds of workers jobless. Besides, such an eventuality would deprive the State of around Rs 168 crore towards power charges and taxes, they added.
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