B&E’s Pawan Chabra peeks into the dissatisfied lives of Bajaj Auto workers who opted for VRS at the Akurdi plant
It’s has been almost two years now since Bajaj Auto Ltd. was hitting headlines for all the wrong reasons. It was in 2007 when the company decided to stop manufacturing at its 47 year old 165 acre Akurdi plant in which took the whole Maharashtra and more importantly the then Agriculture Minister Sharad Pawar by surprise. Despite all the stiff opposition from the state government, Bajaj went ahead with its decision to stop production at the Akurdi plant and offered a Voluntary retirement scheme (VRS) or jobs in Bajaj company to its 2,700 workers. Almost 2,300 workers opted for VRS and the rest are still working in various departments of the company. Interestingly, the company incurred a one time expense of Rs. 61 crore (as per the second quarter results of FY’09) and promised to pay workers their monthly salaries till they reach 60. A report released by HSBC Global Research in 2007 claimed that the total VRS package would cost the company around Rs.170 crore.
But why bear such huge cost? The reason was simple. Bajaj wasn’t getting any tax benefits like excise holidays, concessional sales tax and zero Octroi at the Akurdi plant unlike the case with its other facilities in Chakan, Waluj and Pantnagar. But isn’t all that history now? Certainly not for the workers who spent a lifetime working with the company.
It’s has been almost two years now since Bajaj Auto Ltd. was hitting headlines for all the wrong reasons. It was in 2007 when the company decided to stop manufacturing at its 47 year old 165 acre Akurdi plant in which took the whole Maharashtra and more importantly the then Agriculture Minister Sharad Pawar by surprise. Despite all the stiff opposition from the state government, Bajaj went ahead with its decision to stop production at the Akurdi plant and offered a Voluntary retirement scheme (VRS) or jobs in Bajaj company to its 2,700 workers. Almost 2,300 workers opted for VRS and the rest are still working in various departments of the company. Interestingly, the company incurred a one time expense of Rs. 61 crore (as per the second quarter results of FY’09) and promised to pay workers their monthly salaries till they reach 60. A report released by HSBC Global Research in 2007 claimed that the total VRS package would cost the company around Rs.170 crore.
But why bear such huge cost? The reason was simple. Bajaj wasn’t getting any tax benefits like excise holidays, concessional sales tax and zero Octroi at the Akurdi plant unlike the case with its other facilities in Chakan, Waluj and Pantnagar. But isn’t all that history now? Certainly not for the workers who spent a lifetime working with the company.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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