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BRITISH CORPORATION OF INDIA
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PRESENTED BY-
GEETA SRIRAM SUNKARAJAYAT RATHORE
PRESENTATION ON CONFLICT
MANAGEMENT
KANPUR•Situated on the banks of the river Ganga, Kanpur stands as one of North India's major industrial centres with its own historical, religious and commercial importance.
•The city, which was once described as Manchester of the East, is one of the biggest producers of textile and leather products in Uttar Pradesh.
•Apart from leather and textile industries, fertilizer, chemicals, two wheelers, soaps, pan masala, hosiery and engineering industries are also operating in the city.
•The city hosts the world famous Lal Imli woollen factory, which was once the pride of the State.
•About 50 years ago, Kanpur was at second place in the country after Calcutta in terms of industrialisation.
•However, in course of time, the city could not maintain its glory due to the closure of a number of industrial units mainly comprising of textiles, iron and steel, engineering goods, etc.
•Yet in the State of Uttar Pradesh, Kanpur still holds an important place in terms of concentration of industries at one place.
Cawnpore Woollen Mills Co.
LAL IMLY In 1876, five Englishmen — W.E. Cooper, George Allen, Dr Condon, Bevan Petman, and Gavin S. Jones — set up a mill in Kanpur, about 400 kilometres east of Delhi, to manufacture blankets for the soldiers of the British Army.
Kanpur then had already become a major British cantonment in north India. The mill, located in Civil Lines neighbourhood in the heart of Kanpur, was named the Woollen Mills, Cawnpore (as the British pronounced and spelt Kanpur). Its products were called Lal Imli (red tamarind), after a tamarind tree that stood in the premises of the factory and bore reddish tamarind.
Later, the mill also began making blankets, shawls, wool and other woollen clothes for civilians. The products became so popular that the mill also came to be known as Lal Imli.
The fortunes of the Lal-imli, continued to score new heights under the British Regime. It was during the 2nd World War that the mills were worked to full capacity so as to fulfill the larger demand of Woolen Cloth for the British Armed Forces and this was probably the period when Lal-imli achieved peak performance in terms of production and capacity utilization.
But by the time the war was over, the writing on the wall was clear that sooner or later the British would have to leave India.
The management thus lost interest in the progress and development of the woolen units and all activities of expansion and updating of plant and machinery received a set back. The Indian private management which took over from the Britishers also did not take any effective measures towards restoring the mills to their normal health. The fortunes of the units thus continued to waver.
SCENARIO
IF A picture is worth a thousand words, then this photo of. Lal Imli mill , it was this mill that earned Kanpur the sobriquet ‘Manchester of the East’. At the main gate, a handful of laid off workers have been protesting from years. In their quest for justice.
A few years ago, close to 20,000 people used to work here. Now there are 1,300. What’s worse is that these problems had ceased to be an issue even almost a decade ago.
In 1956 when SRI HARIDAS MUNDRA was the chairman of the company a scam involving the issue of duplicate share certificates took place which snow-balled into a major national issue.
The scam took such proportions that it had effects on the government exchequer and the then finance MINISTER SRI T.T. KRISHNAMACHARI had to resign, over the issue.
Life Insurance Corporation of India was influenced by Finance Minister T. T. Krishnamachari to lend Haridas Mundra a Calcutta-based industrialist of Kanpur Rs 1 crore by purchasing shares in his firms with no real standing in order to boost the prices of those companies in the stock market.
Feroze Gandhi was credited with having sourced the confidential correspondence between the then Finance Minister T.T. Krishnamachari and his finance secretary and raised a question in the parliament.
Haridas Mundra was jailed for 22 months. The Finance Secretary was indicted. Finance Minister T. T. Krishnamachari had to resign earning the reputation as the first Union Minister of India to step down due to corruption.
MUNDRA SCAM OF 1957
As a result of the Mundra Scam, the Board of Directors of BIC was dissolved and a fresh Board of Directors was constituted by the High Court of Allahabad. Sri H.S. Chaturvedi Retd. Judge was appointed as Chairman of BIC, and the Vice Chancellor of Banaras Hindu University became the Vice Chairman.
During the 1970s the downward slide of the company continued and the mills started inching towards sickness. By the year 1980 the mills were almost on the verge of closure. To avoid such a disastrous end to the pioneers of the Woollen Industry, BIC was taken over by the Govt. of India on 11th June, 1981 by a special act of the Parliament "The British India Corporation Ltd. (Acquisition of Shares) Act, 1981."
The private shares of the company was thus acquired by the Government of of India, The Govt. took corrective measures in the form of partial doses of modernization to pull BIC out of doldrums, but the same proved ineffective
As the company continued to incur losses, it was referred to the Board for Industrial and Financial Reconstruction (BIFR) on 31st March, 1991 under the provisions of S.I.C.A. The BIFR declared the company sick.
ANALYSIS
After independence, the BIC's ownership changed hands and began to be headed by Haridas Mundra, who later got involved in the famous Mundra scam in the 1960s.
It was nationalised and made a central public sector enterprise in 1981. The company was at the verge of closure when the government took over and it was declared sick very soon.
Since then, it has been incurring huge losses because of obsolete machinery, surplus staff and shortage of working capital.
REASON FOR CLOSURE OF THE MILL
OUT DATED MACHINERY Low output because of outdated machinery
TRADE UNION TROUBLES Company was not able to pay off the salaries of labors. Lot of strikes happened because of non-payment of salaries. As a result labour union was formed to resolve the issues. Though labour union arouse the whole problem in spite of solving them. labour union started demanding lot of facilities and incentives for labour which the firm was not able to afford.
CORRUPTION
LACK OF HR POLICIES
OLD LIBILITIESThe company continued to incur losses specially because the modalities of nationalization did not address the issue of old liabilities which continued to exist. Even the loans taken by the private management prior to nationalization continued to get compounded resulting in massive accrual of liabilities. The rate at which such liabilities continued to grow was definitely much higher than the company's activities.
The latest revival package approved by the central government included a grant of Rs 17 crore for introduction of a voluntary retirement scheme for surplus workforce of the company, and a bridge loan of Rs 11.5 crore for payment of interest liability to the State Bank of India.
All hopes are pinned on the vast land bank BIC is sitting on in Kanpur and Dhariwal. The government wants to sell the surplus land to raise funds to be pumped back into the sick unit.
However, land can't be sold straightaway because it had been leased out by the Uttar Pradesh government to the company.
Steps Taken by the Govt
Sickness is synonymous with government owned textiles mills in the country.
Apart from British India Corporation's Lal Imli, which manages to barely keep up five per cent production, the eight other textile mills have all closed. The city is dotted with not just these empty ghost mills but the defunct power house as well. The closure of the mills rendered tens of thousands unemployed and contributed to the rising crime rate.
Sickness is synonymous with government owned textiles mills in the country.
Apart from British India Corporation's Lal Imli, which manages to barely keep up five per cent production, the eight other textile mills have all closed. The city is dotted with not just these empty ghost mills but the defunct power house as well.
The closure of the mills rendered tens of thousands unemployed and contributed to the rising crime rate.
OTHER SIDE OF THE COIN
“We should not have continued to strike after independence, we did it to the British but we should have not continued that after independence, the better option would have been, we should have worked extra and asked for our desired benefits, it happens in the foreign countries but here it did not happen like this.
This policy of strike by the unions hurt the mill worst. When government had decided that it will pay sitting wages, workers should have protested. They thought that we will receive payments without any work and lost their jobs instead”
