Philips India - Labor Problems at Salt Lake

Selling Troubles Contd...

In the last week of December 1998, employees of PIL spoke to several domestic and multinational CTV makers for a joint venture to run the Salt Lake unit. Kiron Mehta said, "We can always enter into an agreement with a third party. It can be a partnership firm or a joint venture. All options are open. We have already started dialogues with a number of domestic and multinational TV producers." It was added that the union had also talked to several former PIL directors and employees who they felt could run the plant and were willing to lend a helping hand. Clarifying the point that the employees did not intend to takeover the plant, Mehta said, "If Philips India wants to run the unit again, then we will certainly withdraw the proposal. Do not think that we are intending to take over the plant."

In March 1999, the Kolkata High Court passed an order restraining any further deals on the sale of the factory. Justice S.K.Sinha held that the transfer price was too low and PIL had to view it from a more practical perspective.

The unrelenting PIL filed a petition in the Division bench challenging the trial court's decision. The company further said that the matter was beyond the trial court's jurisdiction and its interference was unwarranted, as the price had been a negotiated one.

The Division bench however did not pass any interim order and PIL moved to the Supreme Court. PIL and Videocon decided to extend their agreement by six months to accommodate the court orders and the worker's agitation.

Judgement Day

In December 2000, the Supreme Court finally passed judgement on the controversial Philips case. It was in favour of the PIL. The judgement dismissed the review petition filed by the workers as a last ditch effort. The judge said that though the workers can demand for their rights, they had no say in any of the policy decisions of the company, if their interests were not adversely affected. Following the transfer of ownership, the employment of all workmen of the factory was taken over by Kitchen Appliances with immediate effect. Accordingly, the services of the workmen were to be treated as continuous and not interrupted by the transfer of ownership. The terms and conditions of employment too were not changed.

Kitchen Appliances started functioning from March 2001. This factory had been designated by Videocon as a major centre to meet the requirements of the eastern region market and export to East Asia countries. The Supreme Court decision seemed to be a typical case of 'all's well that ends well.' Ashok Nambissan, General Counsel, PIL, said, "The decision taken by the Supreme Court reiterates the position which Philips has maintained all along that the transaction will be to the benefit of Philips' shareholders." How far the Salt Lake workers agreed with this would perhaps remain unanswered.

Case Details

Case Code : HROB004
Themes: HR Problems
Case Length : 05 Pages
Period : 1992-2000
Organization : Philips India Videocon
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Consumer Goods & Services

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