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BW Businessworld

Datta Samant’s Factory Closed

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 The golden handshake is done. the last settlement cheques to the workers of Hindustan Unilever’s (HUL) Sewree factory in Mumbai are still being distributed. The company and the Hindustan Lever Employees Union (HLEU) have withdrawn around 40 legal cases against each other that flagged almost three decades of mutual hostility. 

 
The factory saw prolonged agitations in the early 1980s after the workers elected firebrand trade union leader Datta Samant as their president. The company tried to break the union with a two-year lockout in 1988-89, but the workers responded by beginning an alternative soap production unit for survival and introduced a detergent brand called Lockout. Later, agitation in the 1990s gave way to prolonged legal battles. But on this front, the company slowly gained the upper hand. 
 
“We are happy; the union is happy,” says Ashok Gupta, HUL’s executive director, legal and secretarial practice, describing the mood at the send-off given to workers a few days ago.  
 
“We had no alternative but to sign,” says a subdued Franklin D’Souza, an office bearer of HLEU. “The workers were tired of waiting. Some even threatened to immolate themselves in front of the union office if we did not agree to the settlement.”  
 
The settlement, both sides agree, is the best that could be had in the present circumstances. The 800 workers, who survived the three-year shutdown, will continue to get the last drawn wages in 2006 every month till they retire. The pending dues in the scores of legal cases was ascribed a value that gave the employees Rs 1.5-2 lakh each. And the workers got a sweetner in the form of Rs 7-8 lakh as the last three years’ arrears since closure. 
 
The Sewree factory, located on 28 acres of Mumbai Port Trust (MPT) land, and employing 1,100 workers closed operations in July 2006. But it is only after the settlement was signed in October last year, and implemented in recent weeks, that the curtains have finally come down. It also signifies the successful completion of the company’s restructuring process away from expensive city operations to smaller and cheaper centres.  
 
“The cost of operating the unit within Mumbai made it unviable,” says Gupta, who negotiated the settlement. “And the productivity of the workers had fallen below what we were getting outside.” Over the past few years, HUL has steadily dismantled larger metropolitan units and relocated production to smaller centres that offer income tax breaks and other cost advantages. The company currently has a mix of outsourced manufacturing and small production units — six in Silvasa, seven in Uttrakhand, and three in Pondicherry.  
 
“Over the years, HUL’s workforce has come down from a peak of over 30,000 to 9,000 currently; and salaries in the small, regional units average Rs 7,000 per month — one-third of what the Mumbai workers were getting,” says union leader D’Souza.  
 
So what happens to the prize real estate of 28 acres on which the HUL unit is located? Some say the company plans to convert the premises to a central training facility for its Asian operations. HUL’s Gupta is, however, noncommital. “We are evaluating many options,” he says. Abutting the HUL factory, the company also holds another chunk of land in the port area that was once the Tata Oil Mills. HUL took over the company in 1993, but suspended operations after a few years. Both properties together will add up to 30-35 acres and are leased from the MPT.  
 
With manufacturing being stopped in the two units, the MPT has served notice seeking eviction of HUL from its property. Another prolonged legal battle seems to be in the offing.
(This story was published in Businessworld Issue Dated 01-02-2010)


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