Hindustan Motors appears to have terminated the services of majority of its managerial staff on the weekend. There was no confirmation from the management. "Managerial restructuring has been an on-going process over the last 2-3 years and continues in an effort to optimise work flow whilst retaining staff that remains critical to the continuity of operations."

The State’s Labour Minister Purnendu Basu told Business Line that he did not get any formal communication to this effect. “But, I came to know from the employees that 240 staff of the company has been sacked,” he said.

Around 250 such staff were attached the Uttarpara plant, operation of which were suspended since May 24. The total employment of the plant was 2,600. The plant, the oldest in the country, produced Ambassador cars and of late, mainly taxis that still ply on the State roads.

The management’s argument for suspension of work at the plant was that only 20 per cent of the overhead cost of the plant was being covered by the sales of the plant-produced vehicles. It also claimed that the company ran up liabilities worth Rs 94 crore including wage arrears, payments to the State Government (sales tax and land tax) and supplier. Management on the prodding of the State Labour Department paid half the wages of December 2013 to the employees on June 2.

Prior to suspension of work, the monthly operational losses incurred were to the tune of approximately Rs 7 crore, management said in its suspension notice.

After recording the negative net-worth of the company as on December 31, 2013, the company had made reference to the BIFR in February this year.

“This is a pressure tactic. Some of the managerial staff stay in the colonies within the plant complex area. The management may be making way for ridiculous payment in the name of VRS like it did in 2008”, said an employee over phone.

Meanwhile, the Minister said the Labour Department has called a tripartite on June 12. Earlier, the management had skipped such a meeting. Management also sought State Government’s help in divestment of the forge and foundry (divisions of the plant), which requires some approvals from a consortium of lenders, which in turn will enable it to clear backlog on overdue wages, the company said

(This article was published on June 7, 2014)
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