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BALCO - THE DISINVESTMENT STORY
BALCO-A Profile
STAGE
I: THE TUG OF WAR
STAGE II: THE CONTROVERSY DEEPENS
STAGE III: THE DEBATE
STAGE IV: POST SELL OUT DRAMA
continued from Page 5
ALL'S (NOT) WELL THAT ENDS WELL
The workers were not happy with the agreement and dubbed
it as 'a face saving' exercise. 'We could have very easily bargained for a
better deal if only we had negotiated earlier. Our bargaining powers got
considerably reduced when the management realized that we were cracking under
pressure' the workers said. The union leaders had to give to the pressure, which
increased when Jogi who had so long vowed to revoke the deal, backed out. This
was followed by the Supreme Court order asking the workers to consider two
months wages as advance. The workers felt that all the twenty-five points of the
agreement were not exactly in their favor. The management assured that there
would be no retrenchments, not just for one year, as stated earlier, but till
retirement. They would also continue to enjoy all the existing benefits that
were due to them as public sector employees. The wage agreements would be
discussed with the representative unions in three months time and a new package
of wages could then be introduced.
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However, the management turned down the worker's demand
to have the agreement counter guaranteed by the GoI. The management was also
free to make transfers. Many workers felt that 2002 would see mass transfers of
all the 'troublesome' workers who spearheaded the strike. Trade unions
affiliated to the Left Parties expressed their strong displeasure at the manner
in which the deal was rushed through. They blamed Jogi for the workers plight
and said that had he kept up his support, they would not have ended their
strike. Said Harinath Singh (Singh), General Secretary, AITUC, "Mr. Jogi
promised us his full backing, but ditched us at the eleventh hour. He went back
on his words, perhaps due to orders from his party high command. This is highly
unethical. The INTUC taking a cue from Mr. Jogi suddenly developed cold feet and
more or less forced the issue."
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Mr. Jogi's suddenly withdrawing support to the striking
workers had raised many eyebrows. Some of the workers did not see it just as
political opportunism but a definite indication that some underhand deal had
taken place. "We cannot say for certain about who took money to clear the
disinvestment deal in the first place. But we are certain that Mr. Jogi's hands
are not clean now. A deal has definitely been struck between the Chattisgarh
Chief Minister and Sterlite Industries. Otherwise, there is no reason for him to
withdraw his support to the striking workers overnight," the workers alleged.
Singh said that the fight against the agreement would continue if there was any
injustice. He commented, "The first thing on our agenda right now is to get the
Central Government to provide a counter guarantee to the agreement that we had
signed with the management. Although the new owners have said that there is no
question of involving the Central Government now, we will still try our best."
As per the union's demand, GoI should provide a guarantee of Rs. 25 lakhs per
employee if the management went back on its commitment not to tamper with their
service conditions or retrench them. The AITUC General Secretary also said, "The
management also promised not to transfer any employee for one year. But after
that, there were free to do as they wanted. This was a dangerous move."
Commenting on the transfer, he further said, "As regards transfer, the only
place that the workers of Balco at korba can be transferred to is Bidanbagh in
West Bengal. They cannot transfer any worker of Balco to any of their other
group companies. If they do, then we won't keep quiet. Lets see if they are
vindictive or not."
A clear warning for the Balco Management that ALL'S (NOT) WELL THAT ENDS
WELL.
QUESTIONS FOR DISCUSSION
1. What are the various ethical issues, which the case of BALCO
throws up?
2. What were the main arguments raised against the GOI's decision to
dis-invest BALCO?
3. The case of BALCO brings to light the grim reality of problems, which
dog the dis-
investment process in India. With dis-investment plans of
many other public sector
undertakings in the pipeline, what steps do you think the
government should take to
ensure a trouble free changeover?
4. Drawing from the case, discuss the steps, which are to be taken if you
were the private
party, which is planning to take-over a public sector
undertaking in a dis-investment
deal.
ADDITIONAL READINGS AND REFERENCES
1. Rambabu G, Balco beckons bidders: sell-off likely by Dec,
Hindu Businessline,
October 8,2000.
2. Sen Amiti, Centre may offer Esop's to Balco workers,
Financial Express, October 9,
2000
3. Govt., Sterlite seal Balco deal, Hindu Businessline,
March 2, 2001.
4. Karma supports Jogi's charge on Balco issue, Hindu
Businessline, March 9, 2001..
5. As good as it gets, BusinessWorld, March 12, 2001.
6. Jayakar Roshni, A suitable match, Business Today,
March 21, 2001.
7. Ahluwalia Bharat, The valuation perspective,
Business Today, April 6, 2001.
8. Balco strike likely to end today, Hindu
Businessline, May 4, 2001
9. Decision of Balco strike deferred, Hindu
Businessline, May 3, 2001.
10. Balco workers still undecided, Hindu Businessline, May 5,
2001.
11. Balco workers blame management for talks failure, Hindu
Businessline, May 9,
2001.
12. Balco tangle threatens to involve Essar, Daewoo units in
Chhatisgarh, Business
Standard, May 9, 2001
13. Balco's Korba plant staff rejoin work, The Economic Times, May
9, 2001.
14. Rambabu G, Tired Balco workers have little be exuberant about,
Hindu Businessline,
May 11, 2001.
15. Rambabu G, Jogi ditched Balco workers, Hindu Businessline, May
12, 2001.
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This case study is intended to be used as a basis for class discussion rather
than to illustrate either effective or ineffective handling of a management
situation. This case was compiled from published sources.
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