Balco - The Disinvestment Story
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Details
Themes: Corporate Restructuring
Period : 2001
Organization : BALCO
Pub Date : 2002
Countries : India
Industry : Metals & Mining
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Case Code : BECG004
Case Length : 10 Pages
Price: Rs. 300;
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Stage IV: Post Sell Out Drama Contd...
On March 9, 2001, the Balco deadlock took a new turn with the senior Balco officials claiming that the smelter at the plant had started cooling with 40 pots of the cell house of the smelter plant having frozen. To restart operations, it would require about Rs 50 crore and three to six months time. S.C Krishnan, managing director, Balco along with four members of parliament rushed to Korba to review the situation. However, the Balco employees union said that this would only aggravate the situation. All major trade unions expressed their support for the 'ongoing struggle of the Balco workers'.
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Jogi said his government would provide adequate security to workers and management of the Balco plant at korba as per a Supreme Court directive and suggested a dialogue between the workers and management to resolve the ongoing crisis. The management also appealed to the workers to rejoin work to save the smelter. The management threatened a lockout unless the employees returned to work. Said a senior official, "The company has not yet declared lockout. However, if employees do not return to work, lockout may be inevitable." |
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The Trade unions asked workers of all public sector undertakings to participate in a nationwide strike on May 18, in support of the striking Balco workers. In May 2001, the new Balco management offered two months salary advance to the striking employees to return to work. This was rejected by the union. The management said it was ready to give the two months salary advance and negotiate all industrial demands with the workers but not the issue of disinvestment.
Also in May 2001, the Supreme Court asked the workers to resume work on assurance of advance payment by the Balco management. The Balco management also filed an affidavit before the Supreme Court that no workers would be retrenched even though the shareholders' agreement allowed it to do so after a year. On May 4, 2001, a marathon meeting of the union was held to discuss the issue of withdrawing the strike in view of the Supreme Court's directives.
However, the union failed to take any decision. The union blamed the Balco management for failure of talks. Said, Brahma Singh, Chief, Balco Bachao Sanyukt Abhiyan Samity, the apex body of the seven striking unions, "The workers are interested in joining duty but the management is taking a rigid stand". On May 9, 2001, a 25-point agreement was signed between the union leaders and the management. With this agreement, the long drawn out battle between the union and the management seemed to have come to its logical conclusion. Balco employees went back to work ending a 67 day strike.
The trade unions called off the proposed nationwide strike on May 18. In a related development, the Supreme Court stayed all notices issued by the state government to Balco management asking it to show cause why the land leased to its plant not be cancelled as it was situated in a tribal land. The court asked the government to justify its stand in canceling the land allotment to Balco while permitting such allotment to two other private companies – Daewoo Power and Essar Steel.10
10] Daewoo Power Ltd. and Essar Steel Ltd. were also operating in the tribal land of Chattisgarh state.