Alfa Laval Cuts Staff By A Third, Profit Woes Persist

Alfa Laval (India) has pruned its workforce by one-third, including 260 management-level job cuts over the last one year as part of its restructuring exercise.

The heavy job cuts has enabled the company to save around Rs 4.5 crore over the last one year. The cost of bringing down the total workforce from 1,411 to 1,062 via the voluntary retirement scheme for the company is pegged at Rs 3 crore.

Although the company faced initial resistance from its managerial and other staff, Brian Goggin, managing director of Alfa Laval (India) and a turnaround expert specially sent by the parent company to salvage the local outfit admitted that people did not like the changes that he was bringing about.

It was painful and a lot of people did not like it as the easy way of working was over, he said.

Even though some of the shareholders and employees did not like the changes, the customers were happy with him, he said. Goggin denied that anyone was forced to leave the company.

They left of their own accord. Some senior managers disagreed on the restructuring and therefore said they were leaving the company, Goggin said.

Now, he said, the company has completed a systematic streamlining of its workforce aimed at providing greater customer orientation through a more flexible working environment. With flexibility having been brought in, he said the managers are now doing different jobs.

At a turnover of Rs 180 crore, Goggin said Alfa Laval (India) will be struggling to make profit and only above lies the comfort zone wherefrom the company can rake in the moolah.

Goggin declined to disclose the performance for the 5 months ended August 1997, on the grounds that figures would be released only after 6 months are over. But he indicated that business was better and the impact of this will be felt soon. In the current year, he said it would be difficult to say whether the company will make profits. Even 2 years is tough to make profits, he added.

On the business environment, he said it is beginning to turnaround and signs of progress are good for the industry. The company has already booked Rs 100 crore worth of orders. It has also bagged some export orders including two edible oil refineries order from China and one brewery equipment order from Burma. Alfa Laval hopes to achieve 7 to 10 per cent of its turnover from exports.

Addressing the annual general meeting of the company, the chairperson of Alfa Laval (India), Lila Poonawalla, said the restructuring exercise has been undertaken and, along with the positive Union Budget for 1997-98, the company is well poised to take advantage of the emerging opportunities.

In fiscal 1996-97, Alfa Laval posted a turnover of Rs 147.39 crore (Rs 238.02 crore in previous year) and reported a heavy loss of Rs 29.69 crore (net profit of 18.66 crore).

The restructuring exercise undertaken, backed by a positive Union Budget for 1997-98, will help us take advantage of the emerging opportunities Lila Poonawalla Chairperson, Alfa Laval (India)