Financial Daily from THE HINDU group of publications
Friday, Mar 08, 2002
Industry & Economy
Corporate - Manpower
SIV Ind seeks Govt nod for lay-off
COIMBATORE, March 7
SIV Industries at Sirumugai near Mettupalayam has sought the permission from the State Government to lay off its 2,225 workers, as it has been unable to find any source for raising about Rs 46 crore to re-start the plant operations.
The plant operations had come to a grinding halt from October 19, 2001, as the unit was unable to mop up about Rs 6 crore to pay the electricity charges. The Tamil Nadu Electricity Board had issued an ultimatum in July last, demanding payment of power dues for June 2001 within 24 hours, or face supply disconnection.
The management decided to bring the operations to a halt in a phased manner to avoid damage to the plant and machinery. SIV is yet to settle its power dues. Meanwhile, the TNEB effected the disconnection in mid-January this year, after waiting for about 2 months for the dues to be remitted. In its lay-off application to the Department of Labour, the company cited the various factors that had led to the present crisis-ridden situation.
Trouble started five years back, in early 1997, when the factory was forced to suspend its pulp plant operations for over 30 months, as its untreated effluent was let into the Bhavani river polluting the same.
The company invested heavily for setting up a modern effluent treatment plant (ETP).
Engaged in the manufacture of rayon grade pulp, viscose staple fibre and viscose filament yarn, SIV Industries went in for a massive capacity build-up as the market was booming then.
Soon thereafter, there was a crash in the demand for VSF as well as for filament yarn. The companystated that the combination of prolonged closure of the pulp plant, sluggish market conditions, lower capacity utilisation and surplus man power led to a situation whereby it could not generate adequate resources to meet its day-to-day working capital requirements.
SIV Industries, which was considered a blue-chip company less than a decade ago, went into the red and faced an erosion in its net worth. The company was forced to make a reference to the Board for Industrial and Financial Reconstruction.
Owing to irregular and inadequate flow of funds, the company defaulted in its loan repayment schedule, and further assistance from banks and financial institutions was not forthcoming. It could not sustain production.
The company stated that some of the financial institutions had moved the court seeking winding-up of the unit.
The cumulative effect of these factors led to a huge stock pile-up, close to 10 times its normal inventory. At the time of seeking the permission for lay-off, the pulp stock mounted to 5,832 tonnes as against 550 tonnes (normal inventory) and the off-take was only around 10 tonnes in the last four months.
As production had come to a standstill, workmen reporting for duty had to be paid wages for their `idle time'. `We cannot afford to pay the idle employees without laying them off.
It has become imperative under these compelling circumstances to request the State Government for permission to lay off the workmen', a company source said and pointed out that it would come into effect from the date on which the permission would be granted.
Meanwhile, the SIV Employees Union has not only opposed this move, but also demanded that the Government not accord permission for lay-off.
It reiterated its demand for immediate settlement of the wage bill for January and February 2002. It has planned a dharna for March 12.
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