Hindustan Motors declares VRS at Uttarpara unit

CK Birla group company Hindustan Motors is offering a voluntary retirement scheme (VRS) for all workers at its mother plant in Uttarpara in Hooghly district of West Bengal, at the end of a six-month-long closure and production suspension at the unit which used to make the iconic Ambassador cars.

The VRS is applicable to all permanent grade scale staff and technicians on its rolls as of 1 December 2014, Asia's first automobile company said in a filing with the stock exchanges.

''Hindustan Motors Limited has announced a voluntary retirement scheme (VRS) for all its employees of the Uttarpara plant. The scheme will be applicable from November 9th to 20th, 2014 (both days inclusive),'' the company stated in its exchange filing.

The company had declared a work suspension at the Uttarpara plant, near Kolkata, in May 2014 and the company management said in a statement that the latest move was part of its restructuring exercise.

Many, however, consider the announcement of retrenchment of workers as the end of road for 'Amby'.

The workers union at Hindustan Motors, however, said there was no official communication from the management about a VRS.

''We have not received any formal communication from the management on the VRS scheme and as such are not aware of the details of the scheme. I have informally heard that the management has announced the scheme at the factory gates. Instead of discussing with the workers and the unions, the management has unilaterally taken this decision,'' reports quoted CITU leader Santashri Chatterjee as saying.

Also, according to the union, there was no clarity on the company's plans as to how it would pay wages due to the workers. There were also no concrete plans for restructuring the company.

Production at Hindustan Motors' Uttarpara unit had become unviable with productivity per employee falling to as low one car a year.

HM, which is now a BIFR-listed sick company, had earlier terminated the services of all managerial staff following the work suspension.

The company saw its net loss coming down to Rs15.68 crore in the April-June 2014 quarter from a net loss of Rs25.10 crore in the corresponding quarter a year ago. Net sales, however, was lower at Rs8.05 crore against Rs92.76 crore in the year-ago period as production continued to fall.

Analysts say the company can make use of the VRS to cut back labour costs and improve productivity if it decides to reopen the plant.