The Hindu Business Line : Where salary overshadows sales

But the case of Kolkata-based Hindustan Wires Ltd is interesting because the company's sales, at Rs 75,000 for the year ended March 31, are just about one-sixth of the pay of the ED, Mr R.K. Gupta. It is a different matter, though, that the sales have grown more than six times, compared to Rs 12,000 achieved in 2005.

Clue to the poor financial performance can be gleaned from the `management discussions and analysis' in the latest annual report of Hindustan Wires Ltd. It speaks of lack of orders from public sector oil companies for the company's products, viz. LPG cylinder, valves and regulators. Apparently, demand for these products has fallen because of `competitive advantage' enjoyed by `units operating in tax free zones.'

Rehab scheme

A recipe for sickness of the older units, which, perhaps, explains why Hindustan Wires is now on a rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR). During the year, in terms of the scheme, "the Asset Sale Committee has completed the sale of major assets of wire units, including land and building of Sodepur unit," inform the directors. Profit on sale of assets and `write back of liabilities no longer required' add up to Rs 5.3 crore, which shows as the major component in the latest Profit & Loss Account.

Annexure to AGM notice

In the face of such morbidity, what can appear strange is the `explanatory statement' given as annexure to the notice for the annual general meeting scheduled on September 9. The explanation is about pay hike for the ED, scheduled as `special business' at the forthcoming meeting. "Considering his performance during the last four years, and the increased responsibilities, it is necessary to revise his basic salary from Rs 35,500 per month to Rs 67,500 per month w.e.f. April 1, 2006," says the statement.

Only, the salary, after adding "house rent allowance 50 per cent of basic salary, medical reimbursement 10 per cent of basic salary, leave travel assistance 12.5 per cent of basic salary, car with driver, telephone facility at residence, personal accident insurance, contribution to Provident Fund, terminal gratuity and leave encashment" can end up to be many times the sales, if any, during the current fiscal.

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