Professional Documents
Culture Documents
16 Vikalpa
Background of Kamani Tubes Limited and allowances of the KTL employees were nearly Rs 2
crore. In September 1985, the owners abandoned KTL.
Kamani Tubes Limited, a family enterprise, came into
The closure took place violating all provisions of law.
existence in 1959 as one of the units of Kamani Group
of industries and is located in Kurla, a Bombay suburb. Nearly 800 workers were rendered jobless at one Stroke.
(Joseph, 1989,1991; Mookhcrjcc, 1988).
A pioneer in manufacturing non-ferrous tubes and
rods, it produced copper and copper-based alloys; brass
Faced with closure, KEU approached the Supreme
Court in April 1986 for a solution. Meanwhile, it ex-
sugar tubes, and admiralty aluminium tubes. KTL
plored other options such as (i) requesting the Govern-
tubes and rods were supplied to key sectors like power
ment of Maharashtra to declare KTL as a Relief
generation, defence, oil refining, sugar, fertilizer, ship-
Undertaking and leave the management of the unit
building, automobiles, refrigeration, and light electri- with the financial institutions or other bodies which
cals. have a stake and start the company under the new set
Although the Kamani Group had set up several up or (ii) finding out another management who could
units, the management had todeal with only one union, buy and take over KTL. However, the government did
viz. the Kamani Employees Union (KEU) which not show willingness to declare KTL as a Relief Under-
covered all the units. The KEU was registered in 1951 taking and no private management responded positive-
as a staff union of the employees of the Kamani Group, ly to KEU's request to take over the crises-ridden KTL.
numbering approximately 4,500. The Union was initial- At this juncture, a new idea was sparked off in the
ly affiliated to the Indian National Trade Union Con- minds of some of the KEU leaders: Form a producer's
gress (1NTUC). Subsequently, a change in Union cooperative of the employees of KTL and run the or-
leadership took place through secret ballot, resulting in ganization. Before the idea concretized, a series of meet-
a shift of affiliation from 1NTUC to the All India Trade ings and discussions were held among the KEU leaders
Union Congress (AITUC). as well as between the leaders and the rank and file
employees. After thorough deliberations regarding the
In the beginning of 1960s, KTL accounted for nearly pros and cons of workers' takeover of KTL, the General
60 per cent of the total domestic output of non-ferrous Body favoured the proposal of running KTL under
tubes. However, the premier position of the company worker management. The workers expressed full con-
started eroding from the beginning of 1970s and it fidence and trust on the KEU leaders who inspired
slowly started incurring losses due to mismanagement confidence and possessed leadership capabilities. The
and legal feud. By the middle of 1985, the accumulated background of the KEU leaders and the external sup-
losses were estimated to be Rs 4.42 crore as against the port they could derive from professional managers,
paid up capital and reserve of Rs 97 lakh only. By the financial consultants, and technical experts further rein-
beginning of 1985, the bankers refused to provide credit forced the workers' favourable attitude towards the
to KTL. From December 1984 onwards, KTL employees proposal of takeover.
had not received their wages. As a gesture of support for the takeover bid and
On behalf of the employees, KEU filed a complaint expression of confidence upon the KEU leaders, the
in the Industrial Court, Bombay, under the workers agreed to pay in the meeting itself a token
Maharashtra Recognition of Trade Unions and Preven- amount of Rs 11 towards a fund for the cooperative. The
tion of Unfair Practices Act, 1971. KEU sought an order overwhelming support of the workers gave a boost to
from the Industrial Court directing KTL to pay the the KEU leaders' morale for proceeding further and
arrears of wages due to the workmen and staff. The working out details about the takeover and formation
Industrial Court adjudged non-payment of wages as an of a workers' cooperative. Accordingly, the KTL Kam-
unfair practice and directed KTL by its order dated dar Audyogik Utpadak~Sahakar Society (KTLSS) was
February 28,1985, to pay, within three weeks of the date formed with a paid up capital of Rs 10 lakh. Each
of the order, the arrears of wages for the months of member contributed Rs 2,000 from his own and Rs
December 1984 and January 1985. The Court further 10,000 by taking loan from IDBI towards the share
ordered that KTL should continue to pay future wages capital of the society. The cooperative was registered in
regularly. Despite the order, KTL did not pay either the
April 1988.
arrears or the regular wages. Even statutory dues such The Process of Takeover
as Provident Fund were not deposited with the ap-
propriate authority. By August 1985, the unpaid wages The evolution of workers' takeover of KTL could be
traced through seven important phases:
18 Vikalpa
(Chairman), Works Manager, Plant Manager, Produc- As a departure from the earlier practice, the super-
tion Manager, Materials Manager, Quality Control visors were advised to devote a major part of their time
Manager, Personnel Officer, two representatives of in product development and quality improvement in-
KEU, three workmen representatives from the shop- stead of routine supervision. Further, a set of 20
floor, and one staff representative. workmen were chosen to become group leaders who,
The functions of PLC which met in the first week of in addition to attending to their own machine, helped
every month, included monitoring day-to-day working in supervision work. The need for routine supervision
of the plant, supervising the progress of work, and was gradually de-emphasized. Contrary to the earlier
ensuring achievement of production targets. The scope practice, the number of peons was reduced from 15 to
of PLC was restricted to the operational and personnel five. The peons were assigned the tasks of filing,
aspects of the plant; the commercial aspects were kept despatch, and other routine clerical work. By this step,
outside its purview. KTL was able to rationalize manpower at the lowest
level and improve the morale of the peons.
Immediate Tasks after Takeover
Marketing and Product Development
After takeover, the Managing Director identified the
following tasks as critical and initiated suitable steps Two important areas in which KTL laid special em-
accordingly: phasis were the formulation of a marketing strategy
and development of new products. In the meetings of
mobilizing working capital the Board of Directors, the Chairman emphasized the
restoring infrastructural services urgency of evolving a clear and definite marketing
policy at KTL and also observed that the company's
organizing repairs and overhauling activities excessive dependence on sugar tubes was not likely to
fetch sustained profits. He, therefore, felt it was high
updating status report regarding assets and time the emphasis was shifted to developing new
liabilities products. KTL had identified two products for
initiating commencement of commercial opera development: brass wires in ball pen industry and fin-
tions ning quality copper tubes for air-conditioning and
refrigeration industries.
streamlining personnel.
Training and Orientation
As regards personnel, the Supreme Court restricted
the total number to be re-employed to 600. In order to elicit appropriate response from workmen
and motivate them to put in their best, it was felt that
In order to build up a team of competent super- upgrading of workers' technical knowledge and skills
visory and administrative staff, it was decided to limit would be necessary. Accordingly, a series of training
the re-employment of existing workers to 575 and to programmes for the workers were organized which
induct them in a phased manner as per operational were conducted by a professional body. The main ob-
requirements. It was decided to recruit the remaining jective of training was to make the workmen under-
25 people afresh in the category of senior manager, stand and comprehend the overall framework of
engineers, supervisors, and administrative staff. managing the manufacturing organization. The
The personnel recruited by the new management of programme focused on: principles of economic theory
KTL increased from 118 in November 1988 to 245 in and finance, principles of work method and value en-
March 1989 and to 588 in November 1989. KTL had also gineering, and principles of management.
engaged the services of professionals for functional Role of KEU
requirements such as Income-tax, Sales-tax, Excise
Duty, Internal Audit, Company Law, Secretarial mat- In the context of workers' management and ownership,
ters, and legal advice. the role and functions of trade unions assume new
dimensions. The KTL experience suggests that KEU
Regarding personnel, four important steps were had undergone a role reversal from a conflict model to
taken: (i) Enlargement of the supervisor's role in the that of cooperation. KEU had also enlarged its role to
plant, (ii) Induction of a group leader from among the encompass the welfare of workers' family and children.
workmen, (iii) Reduction in the number of peons and In the new situation, the role ascribed to KEU was that
attendants, (iv) Ensuring regularity/punctuality in at- of a vigilant organization which would put appropriate
tendance for officers, staff, and workmen. checks on undesirable management practices. The col-
20 Vikalpa
for Workers' Management (NBWM). The NBWM 4. Moderate size (600 employees) of KTL which
should be accorded statutory status under the Sick In- facilitated closer interaction between different
dustrial Companies (Special Provision) Act, 1985, or work groups which in turn gave rise to a feeling
any other suitable legislation. The government should of togetherness and homogenity.
ensure adequate finance for running the activities of the
Board through regular budgetary allotment. The 5. Presence of a single union (KEU) unaffected by
management of NBWM could be vested with a tripar- inter-union rivalry and its consequent damages.
tite body comprising of: (i) representatives from the 6. Strong leadership provided by both KEU leaders
government (ii) representatives of those trade unions and the Managing Director.
who are instrumental in the formation of workers'
cooperatives and who have been successful in their External
efforts (iii) technical experts in the areas of manage- 1. Continued external support from banks and finan
ment, finance, production, marketing, and related cial institutions and professionals in the areas of
spheres (iv) representatives from banks and financial finance, marketing, production, etc.
institutions (v) professionals and academicians who are
ready to volunteer their services to the Board. 2. Consistent sympathy and judicial support from
the Supreme Court of India.
The main task of NBWM should be to extend advice
to the workers of closed units who desire to revive the 3. Media coverage and publicity which helped
enterprise through workers' cooperatives. The NBWM opinion building in favour of workers' takeover
should carefully study the feasibility of workers' and acted as a morale booster for the workers.
cooperatives as an alternative for turnaround of sick These factors combined together helped KTL suc-
enterprises. It should also advise on the availability of ceed in the turnaround. It is hoped that the experiential
initial working capital and finance for starting the learning emerging from the KTL experience would pro-
cooperative. Continuous monitoring and review of the vide a framework for handling other similar situations.
workers' cooperative formed under its guidance would
also be an important task of the Board. The Board itself
may not offer any financial support but can help the
concerned cooperative to find out the sources of
finance. The constitution of NBWM is at present limited
to the conceptual level. To concretize the idea, detailed
modalities have to be worked out after considerable
debate and discussion.
Conclusions
The KTL experience lends credence to the argument
that in the event of increasing sickness and closure of
an enterprise, a viable alternative of restructuring
would be to allow workers to form cooperatives and
provide necessary financial and infrastructure support
to enable them turn around the enterprise. The factors
which contributed to KTL's turnaround are both inter-
nal arid external which can be summarized as follows:
Internal
1. Workers' strong urge for survival.
2. Workers' readiness to undergo suffering and
sacrifice.
3. Ownership of capital which infused self-con
fidence in the workers' mind and made them
responsive to the needs of the organization.
Saongaon Tea &: Allied Born out of closure of tea Chabagan Workers' Plantation revived.
Plantation Workers' gardens. Owners suf- Union affiliated to AITUC Marked improvement in
Cooperative,Jalpaiguri fered heavy losses. production. Input of fer-
(West Bengal) (Bhoumik. Withdrew assets worth tilizer, pesticides,
1988a) Rs 25 crore. Left behind weedicides increased.ln-
liabilities of about Rs 35 come of the workers
crore. Owners aban- went up by 50%.
doned the tea estates. Cooperative accumu-
Workers lost employmcmt lated savings of
R. 71akh
Tea Plantation Workers' Retrenchment and loss of Tripura Tea Workers' Revived and Increased
Cooperative in Kailashar, employment due to Union (OTU). The thC!n production of tea sub-
Ourgabari, Ludua, Dar- owners' mismanagement left government in stantially. Expanded the
ranadilla, Mayangtuka, Tripura extended sup- area under tea. Uprooted
Aichuk. Dimatoli, Khowai, port and encouragement old bushes and replanted
Lilagarh, Tripura in the form of subsidy, new bushes. Improved ir-
(Bhoumlk. 1988b) loan and grant-in aid rigation system in the
garden. Recorded satis-
factory financial perfor-
mance. Retrenched
workers reemployed.
Welfare and other
amenities to workers res-
tored
New Central Jute Mill, Cal- The mill belonged to the All14 unions existing in Workers prepared a
cutta (Scta\vad and Bose, Sahu-Jain group. the mill combined revival package which
1992) Recorded substantial los- together and provided was sanctioned by BIFR.
ses from 1970 onwards. leadership for a workers' Current turnover Is
Lack of available fund. cooperative around Rs 80 crore. Rs 4
Meagre market share. crore cash profits
Employees' dues totalled predicted In 1992 The
about Rs 10 crore. The mill under workers'
mill defaulted to State management has gone
Bank of India a total of for modernization and
Rs 7 crore. Accumulated shifted attention to
losses were around Rs 55 manufacture of non-
crore. About 10,000 traditional items such as
workers were on the bleached and dyed hes-
verge of being thrown sian, soft luggage
out of employment material, floor coverings
and light cam. Currently,
the workers hold control-
ling interest to the tune
of 52%. The State Govern-
ment stake stands at 41%
and the balance owned
by banks and financial in-
stitutions
22 Vikalpa
Name of the Genesis LeAdership Perfor7rlllJ'U:e
Cooperative
Parishram, Adarsh, Ak- Eight cooperatives came Leadership and Cooperatives worked as
shay, Pragati, Mahashakti, into being between 1987 patronage was provided ancillary units and sup-
Ajay, Sarvodaya, Urja of and 1990at theGujarat by the Managing Oirec- . plied to CTCL com-
CuJarat Tractor Corpora- Tractor Corporation Ltd tor,OTCL ponents and spare parts
tion Ltd. (OTCL) Baroda as a measure to which were earlier pur-
(Mookhcrjee, 1992) rehabilitate some of the chased by CTCL from
workers who had ac- open market. Each
cepted the corporation's society is making profit
offer of voluntary retire- and has increased turn-
ment. Sickness was over and earnings of
caused by under-utiliza- members. Average earn-
tion of plant capacity, ings of workers is around
high percentage of rejec- Rs 6000 per month. Strict
tion, rising cost of wage production schedule
and salary, inadequate maintained. Delivers
network of distribution finished products to
and dealership of trac- OTCL in time. Rejection
tors, falling market share, hasbccnrcduced.Each
growing competition society hu attumulated
from other tractor some assets. After meet-
manufacturers, under- ing the liabilities, involve-
utilization of manpower ment of the worken has
and restrictive work prac- increased and work
tices habits have changed to
productionorienation.
The cooperatives helped
GTCL reduce its losses
and increase the sale and
turnover of tractors
Workers' Cooperative in . The cooperative came The Chairman and )MEL was revtved from
jalpur Metal and Electri- into being as an offshoot Managing Director with the brlnk of closure and
cals Ltd. (JMEL) (Joseph, of workers' participation active cooperation of four liquidation and put on
1992, Mookherjce, 1988) introduced in }MEL in unions affiliated to the rail. Production and
the form of Plant Level AITUC, CITU, INTUC, productivity Increased.
Committee, Planning and and BMS Quality of products im-
Production Committee, proved. Market share ex-
Purchase and Sales Com- panded, worken allotted
mittee, and Communica- equity sharos and nearly
tion Committee as a turn- 66% of the total equity of
around strategy }MEL is currently held by
the workers through the
employee cooperatives.
Two workers appointed
as Directors in the Board
24 Vikalpa