Vanaja Textiles headed for closure

THIRUVANANTHAPURAM: Vanaja Textiles Ltd, one of the oldest private textile mills in the State employing about 500 workers, appears to be headed for permanent closure.
Labour Department sources said on Sunday that a meeting convened by the Regional Joint Labour Commissioner in Ernakulam on Monday last decided on the sale of the mill, located at Kurichikkara near Ponganamkadu in Thrissur district.
Under the agreement, the employees will get a compensation at the rate of 13 days a year, in addition to gratuity. The workers should put in their papers before accepting the compensation.
The machinery and sheds of the company would be dismantled after disbursement of the compensation, the sources told The Hindu
They said the decision to sell the mill was taken without exploring the viability of a revival package submitted by a section of the employees.
The employees claimed that the package would help the company make a net profit of 10.6 per cent if there was no further increase in liabilities and the wages were frozen at the present level.
The company, which started production in August 1951, imposed lay-off in April 2003. Increase in wage cost, electricity charges and raw materials and sluggish demand for cotton were initially cited as the reasons for the lay-off. The management also published notices announcing that paucity of working capital had led to the closure.
Liabilities
As per the petition filed by the management before the Board for Industrial and Financial Reconstruction (BIFR), the company had liabilities of Rs.3.6 crore to Central Bank of India and Rs.9.6 crore to Industrial Development Bank of India (IDBI).
It had to remit Rs.9.49 lakh as Provident Fund contribution, Rs.2.8 lakh to the Employees State Insurance Corporation and Rs.1.24 crore to the Kerala State Electricity Board.
The BIFR had then appointed IDBI as its operating agency to formulate or initiate a viable scheme for its revival.
The efforts made by the previous United Democratic Front (UDF) Government to revive the company had not made much headway.
Trade unions in the company had accepted several proposals put forward by the management, including freezing of wages and stoppage of recruitment of permanent hands.
However, the workers did not yield to the demand of the management to work on bandh or hartal days and to reduce the wages by 25 per cent.
The Ministers of Labour and Industries had jointly convened a meeting to sort out the issue after the Left Democratic Front (LDF) Government came to power. A section of the employees owing allegiance to the Centre of Indian Trade Unions (CITU) had then submitted the revival package as per a suggestion made by the Government.
The CITU leaders alleged that neither the Government nor the IDBI had so far invited them for talks.
Pointing out that a majority of the workers were below 50 years and had served the company for a period of less than 20 years, they said the compensation package worked out at the RLC meeting would not be attractive for such category of workers.
All that the Government had done so far was to assure the management to give some more time to settle the arrears in terms of PF and ESI contributions and the electricity bill.
The Central Bank of India and the IDBI had reportedly agreed to give the option of one-time settlement to the company to clear its dues at reduced liability levels.
The employees of the company claim that the Central Bank had reportedly even agreed to give further loan to the company as working capital provided the Government gave surety.
However, no serious initiative had been launched in this regard so far, the CITU leaders alleged.