Jk Cotton Workers Pen Revival Plan

The JK Cotton Mills workers' co-operative has estimated the sale value of the company's property at Rs 252 crore as against the management estimate of Rs 86 crore.

This estimate is spelt out in the revival plan of the workers' co-operative, which was forcefully presented at the joint meeting of FIs' and banks at the IFCI office in Lucknow. The meeting was called for making final preparations for the revival plan of JK Cotton Mills, lying closed for the last 12 years.

The co-operative was not formally invited to attend the meeting, since the BIFR had put up a condition that only those workers' co-operatives registered by the respective state governments would be allowed to present their revival plans.

The co-operative leaders had warned the IFCI that if they were not allowed to present their plan, they will storm the meeting. The IFCI brass allowed them to come and present their plan, which the operating agency may not have to consider.

The revival plan, as prepared by the Singhanias of the JK group, envisages a total investment of Rs 102 crore, of which Rs 86 crore is to come from the sale of property. The JK group is to give an interest-free loan of Rs 12 crore and the rest is to be garnered through the sale of obsolete machinery and deductions from workers' salaries.

While the FIs' and the banks are to waive all interests and agree to accept the principal only, the scheme is harsh on the workers. It demands that the workers will have to give a part of their wages to the management as interest-free loan for three years. It also says that whatever be the years of service, the workmen are to accept only Rs 25,000 as gratuity, etc.

Thus the JK group is trying to turn the tables on the workers' co-operative by trying to impose harsh measures as a pre-condition for reopening the mills.

But the workers' cooperative, in its counter plan, has placed the value of the property at Rs 252 crore. It further included a sum of Rs 40 crore, to be paid by the JK group, which was allegedly siphoned off during 1985-89. Thus, the total funds at the disposal of the company for revival are Rs 296.97 crore.

The cost of the scheme has been envisaged at Rs 213.23 crore, leaving a surplus of Rs 83.74 crore. It departs from the JK management's scheme in the assessment of property. The co-operative has evaluated the property based on the circle rate of the Kanpur Development Authority, while the JK group have not given any basis for its valuation.

Another significant departure is the payment to the workers for the intervening period of 12 years. The scheme of the cooperative provides for a payment of Rs 100 crore, of which Rs 50 crore is to be their equity contribution; and the remaining Rs 50 crore is to be paid to them in cash in instalments.

RK Tewary, the workers' cooperative secretary, alleged that the management is planning to reopen the mills for a while and sell the property and once that has been done, to close it down again. "They have under valued the property to pocket more then one hundred crores of rupees. Our task is to unmask this plan," he said.