The Telegraph
Thursday , July 17 , 2014
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Another blotch on Bengal wall as paint pioneer closes lid

Calcutta, July 16: Shalimar Paints, the oldest paint maker in Southeast Asia, has suspended work at its Howrah plant, joining a list of companies that have been testing the waters to shutter operations in Bengal in recent months.

A Trinamul union leader went so far as to suggest that Shalimar suspended work “to embarrass the state government”.

Shalimar, which started operations in Howrah in 1902 and made the paints that sheathed Rashtrapati Bhavan and the Howrah bridge, said it did not have the money to reconstruct the plant in a manner that would ensure no-objection certificates from the government. A fire had broken out at the Howrah plant on March 12.

Shalimar, which said the employees at the plant totalled 154, has been wallowing at the bottom of the pile in terms of market share in the two main paint segments — decorative paints for households and industrial grade paints.

But the significance of the suspension of work lies in the fact that Shalimar is the third company to do so in a state where the shrinking pool of investors usually does not risk political wrath by shutting down factories.

A common link is that all the shutdowns coincided with the change in the political climate in Delhi. The Centre has little to do with the operations of industrial units in states but some believe the industry-friendly image of the new government may have emboldened owners keen to shed the millstones around their necks to test the “exit” waters in Bengal.

The ailing Jessop & Co had suspended work two days before the declaration of the general election results while Hindustan Motors closed its Uttarpara plant soon after. Neither has reopened the factories since then, although the state government had made some effort to get them functioning again.

Another striking feature is the near absence of labour trouble — the usual suspect in Bengal — in most of the units that have halted seemingly non-viable operations.

Jessop did cite labour issues but Hindustan Motors blamed market realities while Shalimar has suggested cash constraints.

“Now it is learnt that unless the company is ready for huge capital expenditure to reconstruct the plant and comply (with) all the recommendations of the concerned authorities, the various departments will not grant no-objection certificates. Since the company is in no position to allocate the required capital outlay, it has been decided to suspend the operations with effect from 6am on 16. 07. 2014,” Shalimar said in a suspension notice.

“Since the suspension has been resorted (to) for reasons beyond control of the management, the workmen and the clerical staff concerned will not be entitled (to) any wages/salary/benefits for the period of suspension,” the notice said.

Shalimar, owned by Girish Jhunjhunwala and Ratan Jindal, has two plants in two other states.

Praveen Asthana, head of operations, Shalimar Paints, said: “After the fire incident in Howrah, we have been making all efforts to start operations at the existing plant and have been paying full wages. However, complying with all the statutory requirements will take an inordinate time due to the age of the plant.”

A source close to the management rubbished suggestions that the promoters were not keen to run the plant. “The owners put a new management in place last year after spending a significant amount,” the source added.

But a Shalimar veteran said: “The company has seen several changes in ownership and management. The present promoters are not engaged in the paints business and their interest in Shalimar might be ebbing. The company needs a big cash infusion to expand operations. The company was doing reasonably good business in the face of stiff competition. But last year, its sales dipped; it also hasn’t been making profits.”

The workers turned up for the morning shift around 6am to find the factory gates closed.

Debashis Sen, secretary of the INTTUC-affiliated Shalimar Paints Ltd Workers’ and Workmen’s Union, said: “The state government has been cooperating with the management to ensure that the NOC from the fire services department comes through as soon as possible. They suspended work to embarrass the state government.” The union leader said a police complaint had been lodged.

State labour minister Malay Ghatak said he would “talk to everyone concerned tomorrow”.

Asthana, the head of operations, said that alternative employment at other depots and plants had been offered to the employees.

Sen riposted: “They get Rs 5,000 to Rs 6,000 per month. It is not possible to work with the same pay in other parts of the country.”