Unless you've driven down the dusty, potholed roads of Chhattisgarh to reach the sleepy town of Korba, chances are you'll miss the second chapter of the controversial disinvestment story of the Bharat Aluminium Corporation Ltd (Balco). Or, unless you've seen the tireless, sweaty face of foreman Raghubir Singh Yadav. He's one of the estimated 6,500 workers of the 37-year-old company who have—in a unique gesture to compensate for a 67-day strike last year opposing privatisation—volunteered to work overtime for free till the plant records 100 per cent operational output.
One year after the Centre's first big-ticket privatisation (divesting 51 per cent of Balco for $125 million or Rs 551.5 crore to the London-based Anil Aggarwal's Sterlite Industries), it's this very positive attitude of the workers that's helping the aluminium maker sharpen its nails in the stiff competition with the other two major producers of the metal—the Kumarmangalam Birla group's Hindalco with 2,42,000 tonnes, and the state-owned National Aluminium (Nalco) with 2,30,000 tonnes. By quadrupling its annual capacity to 1,30,000 tonnes, Balco has jumped to third place—the ultimate plan is to reach four lakh tonnes. (India is now almost self-sufficient in aluminium with domestic production of nearly 6,18,000 tonnes a year).
The other proof of Balco's bounding recovery from crisis is the beaming face of Chhattisgarh Chief Minister Ajit Jogi, who had made Balco Issue No. 1 when he took over the reins of the newly carved out state. In a head-on political confrontation, Jogi firmly sided with the workers in the privatisation controversy, contesting the Centre's valuation of the company, its land transfer deed and other issues that culminated in the long strike by the workers. The latter returned to work only in June but the controversy dragged on till December when the Supreme Court upheld the sale, chided Jogi for obstructing the deal and firmly excused itself from economic decisions by the government.
A year later, Jogi seems to have executed a complete turnabout, happily. Post-strike, workers returned with a court-brokered agreement that protected their jobs and paid them full salary for the strike period. "Sterlite," Jogi crows, "is scripting a success story and Chhattisgarh is proud of it. The workers are excited because there has been no retrenchment. The company has guaranteed that there will be no retrenchment or vrs and finalised a 10-year job hike plan that has made many sit up and take notice. It's a package that Balco's never managed since inception." Today, Jogi's fashioning a similar programme among other state PSUs, outrightly closing as many as 30 of them. "Who says we protested against disinvestment? We only protested against the company's valuation. We are disinvesting all over the state," he adds.
Agrees Chhattisgarh Infrastructure Development Corporation MD Sailesh Pathak: "The state has a great track record in work culture. Balco only reflects the mood at Bhilai, the only SAIL unit which hasn't lost a single manday. With increased capacity, there will be more jobs for the locals. Surely, that's good news."
Pathak's upbeat mood finds a ready echo at Balco's twin plants in Korba where smiles have returned to the faces of hundreds of workers. The initial fear was that the new management would halve the staff to around 3,000 to reduce the employee cost-to-turnover ratio which is still a high 23 per cent (Rs 180 crore out of Rs 750 crore) against Hindalco's 6 per cent and Nalco's 8. Following the strike, Balco's production halved and it had to spend an extra Rs 180 crore over the next six months to return to 95 per cent normal operation.
Standing next to an alumina smelter which routinely sprays flares as if on an extended Diwali, Yadav and his colleagues agree that contrary to speculation the new management has buoyed the spirit of the workforce by offering an unexpected salary and benefit package."We heard salaries would stop. But it increased. A cup of tea continues to be sold at 10 paise and lunch at one rupee. We are getting shoes from Bata, uniforms made of Grasim fabrics, four Lux soaps and four Ariel bars a month. No one's complaining," says Yadav. Adds foreman Bhim Singh: "We were worried by the rumours. It was for this reason we struck work to sympathise with the contract labourers. But nothing happened."
And that seems to be the move that made the new management win the popularity contest. Says Ram Deo, electric cutter: "We were sure about the loss of jobs. We'd often been told earlier that the company was heavily overstaffed." Agrees Sardul Singh, contract labourer: "Our worries were the worst. On the one hand, the rumour was that even hundreds of confirmed jobs would go. On the other, we were told by union leaders that the new management will avoid contract labour. None of this has happened. In fact, we have an agreement with the management that guarantees continued jobs. Even those being relocated are getting regular salaries and perks."
Adds V.K. Sharma, union leader: "The problem is not financial, but the sentimental value. The management needs to interact more with us. We haven't met the chairman (Navin Aggarwal) despite his repeated visits to the plant. A few departments like accounts have started outsourcing but there are still no job losses. Overall, the company is performing absolutely well."
And the performance should improve in the coming years. Top company officials say that the acquisition completes Sterlite's value chain—from bauxite to high value-added foils—and takes it a long way towards its ambition of being a metals major. In 1995, Sterlite acquired Malco, a primary integrated aluminium producer, and India Foils which produces value-added foils. It now wants to bid for a 26 per cent stake in the state-owned Hindustan Zinc Ltd.
Says Balco MD S.C. Krishnan: "Balco's current technology is very old and will be upgraded soon. We turned around the loss-making Malco (it had reached the BIFR) within a year of acquisition. We need to develop Balco's bauxite mines, modernise the smelter and go for value addition. We are trying hard to put behind us the traumatising days of the strike. There is no way to turn back economic reforms. We have to stand in competition in the global market." Adds V.S. Bapna, president (marketing): "You don't have an option when the finance minister has reduced import duties (to 15 per cent) this year. To me, Balco was a perfect case to test the battle between the forces of the new order and the rearguard action of the old order. In this case, the former triumphed."
Shayar Ahmed, vice president (human resources), admits that the workers are working overtime to get full output. "And they'll achieve it. They have told us that they do not need overtime money and worked out shifts accordingly. Can you imagine such excellent relationships within a year of turbulence? That too, a strike which bound us inside the plant for 67 full days. The realisation that we mean business, and are not mean people, has dawned fast. And for good."
Forget the management, today even Balco workers don't want to talk about it anymore. Says Prabhu Dayal, smelter worker: "We have hardly felt any change because we see the same faces. Besides, the new management has done nothing to make us feel that we are in for hard days. We got full salaries for the strike period too. We are not complaining." Agrees Bramha Singh, general secretary of the Balco Mazdoor Union, who led the strike: "It (the strike) was a terrible mistake. There is virtually no pressure. Even idle employees are being paid and the company pay package is the best in the last three decades."
Balco's happy faces script a second success story out of the government's privatisation efforts.They also demolish, like in the case of Modern Foods, two of the greatest myths associated with privatisation: job loss and selling cheap. In both cases, it's clear that there would have been no step-up in production or modernisation or fresh investment without the entry of private owners. Especially in the case of Balco, modernisation was the only way to save the company from going under. Thanks to the new teamwork, the company has managed to improve capacity utilisation, if not yet employee cost. The best news is that privatisation seems to have been finally accepted as a feasible option.