Disinvestment of Bharat Aluminium Company & Industrial Turmoil

8/17/2019 Disinvestment of Bharat Aluminium Company & Industrial Turmoil

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DISINVESTMENT OFBHARAT ALUMINIUMCOMPANY & INDUSTRIAL

TURMOILPRESENTED BY

MANOJ KUMAR

ROLL NO. 17

PGEXP 2016


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Genesis of Industrial Turmoil-BALCO Disinve

• THE CASE STUDY LOOKS AT THE ISSUES RELATING TO THEDISINVESTMENT OF BHARAT ALUMINIUM COMPANY BALCO! GOVERNMENT OF INDIA GOI!

• IT DISCUSSES THE INCIDENTS "HICH SURFACED AFTER THE DECISION TO REDUCE ITS STAKE IN BALCO TO %' AND SELLMAJORITY HOLDING TO STERLITE INDUSTRIES.

• IN FEBRUARY 2001( "HEN THE GOI ANNOUNCED THE DISINVDEAL OF BALCO( HELL BROKE LOOSE.

• BALCO EMPLOYEES & THE OPPOSITION PARTIES VEHEMENTLY

OPPOSED THE MOVE AND ACCUSED THE GOVERNMENT OFSELLING BALCO FOR A PRICE "HICH "AS FAR BELO" ITS ACVALUE.

• THERE "AS ALSO STIFF RESISTANCE FROM THE GOVERNMENCHATISGARH( AS "ELL AS THE "ORKERS OF BALCO "HO "STRIKE OPPOSING THE DEAL.


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Genesis of Turmoil…DURING THE CASE STUDY VARIOUS ISSUES COVERING MANY INDUSTRIALISATION & UNDER CURRENT OF "ORKERS BEHAVPARTICULARLY "HEN THEY FIND THEMSELVES FELT CHEATEDOF LARGER POLICY DECISIONS "ITHOUT CONSIDERING THE FACED BY ITS "ORKERS( "HO IN REALITY RUN THE FACTORYSURVIVAL DEPENDENT UPON THE SURVIVAL OF ORGANI)ATI

• A GENERAL UNDERSTANDING OF THE PROBLEMS ASSOCIDISINVESTMENT+

•

THE POLITICAL AND OTHER PROBLEMS FACED BY THE GOTHE PROBLEMS FACED BY THE PRIVATE PARTY AND HO"MANAGE THEM+

• THE ETHICAL ISSUES RELATING TO SALE OF BALCO TO A PARTY+

• FACTORS AFFECTING ,BUSINESS ENVIRONMENT-( "HEN

SENTIMENTS & EXPECTATION OF "ORKERS ARE IGNORE


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T/ U F34/5 O BALCO P893:853:8;<

T/ =893:853:8;< ; BALCO 35 >//< :/ ?;5: >8@3; 4; 544/5589/ I


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Unprecedented 67 das stri!e "support of union on $e#est of CG

T/ 7(000 5:;


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Insiders &tor I< A5: 2006( CAG /=;:


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ISSUES RELATED TO VRS OPTIONAL OR IMPOSED

T/ /=;: 535*

,F;? /:38/ 8


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DEFERRED PAYMENT A CLEAR VIOLATIONSHAREHOLDERS AGREEMENT

'A ma(or reason for dissatisfaction of t#e )*& $ene+ciaries "as t#e ar$itrat#e mana,ement to follo" a deferred pament sstem "#ereas t#e )*& c

amount is paid onl in +ve installments "it# a ,ap of 6 mont#s $et"een ea

T#is act of t#e mana,ement is a departure from t#e standard procedure aearlier $ t#e ..C%

/an of t#e retirees cited t#at t#is deferment of pament #ad created lots in future #ouse#old plannin,%

Instances "ere cited "#ere t#e retirees #ad to +nd out ot#er sources of +ncertain alread committed #eads of e0penditure in anticipation of t#e reali)*& amount in sin,le pament%

T#ese include1 completion of construction2renovation of #ouses and marriadau,#ters follo"in, pre-committed o$li,ations%

It "as also "idel complained t#at "#ile pament of e0-,ratia "as made iinstallments all paa$le amounts and recoveries from t#e "or!ers to t#e +deducted from t#e +rst installment itself%


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DEFERRED PAYMENT A CLEAR VIOLATISHAREHOLDERS AGREEMENT

M3


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On 3ost )*& DU4& ,M;/ :3< 0 =/ 4/


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IMPLICATION ON LOCAL LEVEL DEVELOPMENT

T#e "ider impact of privatisation and )*& on t#e communit and service prov

t#e emploees as "ell as t#e local development of t#e area "as also studied

detail% T#e report ela$orates t#e follo"in, on t#is issue1 'Anot#er ma(or concern t#at "as addressed in t#e stud "as t#e impact of

privatisation on t#e development of t#e localit i%e% BALCO a,ar and t#e viaround it% It "as anticipated t#at t#e s#ift of mana,ement from t#e pu$lic sect

private strate,ic partner ma lead to certain c#an,es in t#e approac# of t#emana,ement in addressin, issues related to local level development%

T#is aspect assumes added importance as all t#e pu$lic sector underta!in,s

$ac!"ard and developin, re,ions 8suc# as 9or$a: "ere speciall !no"n for t#econcern for re,ional development in terms of provision of emploment to loca

creation and provision of $asic amenities and services free of cost or at modersu$sidised rates 8"#ic# include "ater sanitation electricit creation of roads

on:%

In t#is line BALCO $efore t#e disinvestment #ad a commenda$le trac! recor

contri$utin, to"ards local development% A considera$le s#are of t#e "or!force

compan "as inducted from local people%;


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3O&T 3*I)ATI&ATIO D4)4LO3/4T&

After privatisation t#e scenario c#an,ed completel

T#e pointed out t#e case of a ne" unit "#ic# #as $een launc#ed under t#ae,is of )edanta a sister concern of BALCO "#ere a ma(orit of t#e "or!erinducted so far are non-locals

T#e also cited t#at t#e presence of "or!ers from C#attis,ar# is minimalamon, t#e contract "or!ers involved in t#is pro(ect as "ell as in t#e ot#erconstruction ventures in t#e localit% In t#e construction sites t#e

contractors mostl en,a,e mi,rant la$our T#e contractors are ,ettin, most of t#e "or!ers from ot#er states suc# as

-7> per cent of t#econtract "or!ers "ere selected from local areas t#ou,# t#e contractors"ere often outsiders% o" $ot# t#e contractors and manual "or!ers areoutsiders


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&tate of 4ducational Institutions T#e t"o sc#ools located inside BALCO a,ar #ad $een t#e ma(or educa

institutions in t#e area apart from a fe" ,overnment primar sc#ools%

Due to t#e su$sidised fee structure and ot#er $ene+ts availa$le to t#e

t#e BALCO emploees t#e enrolment in t#ese sc#ools "as mostl from

BALCO communit%

Of late due to t#e cumulative e?ect of several factors t#ere is a visi$lesc#ool enrolment rates%

In t#e li,#t of t#is development t#e ne" mana,ement closed t#e (unio

sc#ool functionin, "it#in BALCO a,ar 8in @>>: and inte,rated t#e remstudents and teac#ers to t#e /ain &c#ool%

o"ever it "as pointed out as reall painful $ man of t#e responden

t#e compan is usin, t#e (unior sc#ool $uildin, as a "are#ouse2,odo"n


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e" Developments As a "or!er reacted1 'T#e 8t#e ne" mana,ement: #ave converted it

Its not $ecause t#e dont #ave an ot#er $uildin, or space to store t

$a,s% It is (ust to s#o" us t#at t#is is "#at t#e t#in! a$out t#e educato?sprin,s and t#e development of t#is localit%;

'T#e local people increasin,l feel t#at t#eir to"ns#ip #as $ecome mo

t#em% T#e sc#ools are una?orda$le and ,ettin, closed t#e #ospitals afor local people even entr of locals into t#e BALCO to"ns#ip area for

pett $usiness purpose are #i,#l monitored and scrutinised%

T#e people also $elieve t#at t#e ne" mana,ement #as no interest in mt#e ,reen $elt in t#e re,ion and up,radin, t#e pu$lic utilit services in

t#ou,# development activities are $ein, carried out for private use of

on emer,enc $asis%;


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e" Developments…% T#e present stud $ Dr% Ba$u 3% *emes# #as unmas!ed t#e u

privatisation of t#e pu$lic sector underta!in,s as a "#ole and

particular T#e report itself is a document "#ic# clearl e0poses t#at /2s

present #oldin, compan /2s )edanta #ave Ea,rantl violateclauses of t#e are#olders A,reement in letter and spirit

T#is is a $reac# of t#e contract on "#ic# t#e un#ol deal "asDA ,overnment% Does t#e U3A ,overnment possess t#e court#e deal "it# &ri 3%C#idam$aram t#e erst"#ile Director in /2s*esources at t#e #elm of its Ca$inetF

/ore suc# studies s#ould $e conducted of t#e ot#er companieprivatised durin, t#e DA re,ime li!e t#e /odern .oods Cent)&L industan Teleprinters etc% so t#at t#e social and econoprivatisation are revealed in all t#eir star! and $rutal realit


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Central Government o"ned 3u$lic &ector Und

Particulars No. Profit/Loss for the

Profit maki! PSUs 122 ("

Loss maki! PSUs 111 (

No rofit or No loss 1

otal um*er of PSUs 2%+ ("

otal ,estmet


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&tate Level 3u$lic &ector Underta!in,s in India

Particulars as o %1st arch 1'

Profit maki! PSUs

Loss maki! PSUs

No fuctioi! PSU

PSUs ot su*mitte accouts

otal um*er

otal ,estmet (US$ millio)


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E?=;?/


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THE EFFECT OF STATE-OWNED ENTERPRISE PENSION CONSIDERATIONS ON PRIVATIS

, all cases of riatisatio throu!h strate!ic sale route the rotectio of emloyee iterest hascosieratio.

he e6isti! serice coitios of the emloyees are rotecte iclui! ay esio o*li!atios 7hichhai! .

ostly ast lia*ilities of the emloyees are settle rior to isiestmet.

, seeral cases the strate!ic arter has also uertake to meet ast lia*ilities relate to emloyees.

, may cases 7here the emloyees faoure olutary retiremet *efore sale li*eral seerace ayriatisatio.

3t the *e!ii! of the rocess itself iscussios are hel 7ith emloyees a all issues relati! to seemloyees lia*ilities etc. are settle. hese are fie tue throu!h further iscussios as the isiestm

Paymet of ast lia*ilities 84S etc. o iole *u!etary allocatios *y the 9oermet 7hich is 7ork7ith the 3miistratie iistry a iistry of :iace.

,t has *ee the e6eriece that the alue of eterrise is cosiera*ly ehace as a result of reso*efore ha. hat the 9oermet has so far !ot hi!h alue for the comaies sol oe of the reasos


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Disinvestment of Bharat Aluminium Company & Industrial Turmoil

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