Indian Bank No To Loan For Binny Workers Wages

The troubled Buckingham & Carnatic Mills, run by the Binny Ltd, plunged into yet another crisis yesterday, with Indian Bank turning down the Tamil Nadu government's plea to release funds for payment of April wages to the 4500 employees of the mills.

"We are not in a position to lend money as the company's account does not have any money and there is no limit available to them. Lending to the unit at this stage will be unviable for us," M Rajavadivelu, general manager of I Indian Bank, told PTI here yesterday.

The bank had agreed yesterday to consider the government's request to release funds against state government guarantee and on second mortgage of the Binny Mill property.

 

The unit, which was closed in June last year due to damage to the plant during floods, was reopened on march one last, but is now rapidly slipping into stoppage of production for want of raw material and working capital.

A sum of Rs 5 crore, which accrued to the company as part of insurance compensation against the plant damage, is locked up in the Indian bank, which had obtained a Supreme Court stay against withdrawal of the amount.

The bank, in a consortium of lenders to Binny Ltd had been approached for working capital financing as part of an agreement between the management and the union, entered into at the instance of the state government.

Meanwhile, anxious workers numbering 4,500 yesterday sought an alternative solution from the Tamil Nadu labour minister A Rehman Khan, for payment of their April wages, even as the management said it would adopt a 'wait-and-watch' attitude.

Indian Bank had overshot its self-imposed deadline of 1600 hours yesterday, to announce whether it would advance Rs 1.8 crore to the Binny management for paying last month's salaries to workers, against the company's Rs 5 crore deposit locked up with the bank.

Even as the management maintained it did not have money to run the unit, the workers' union urged Binny to prevent closure of the mill, reeling under acute shortage of raw material.

The various problems confronting the mills took a serious turn recently, when production started coming down rapidly with the working capital drying up completely. The unit, which was closed down in June 1996 after floods spoiled the plant and machinery, was reopened on March 1 last on a trial basis after government intervention.

The ruling DMK, which had committed itself in its last election manifesto to resolve the age-old industrial dispute, impressed upon the bank to arrange funds to pay March wages.

But, its attempt to repeat the exercise for April is yet to succeed.

"We are not in a position to lend as the company's account does not have any money and there is no limit available to them. Lending to the unit at this stage will be unviable for us." M Rajavadivelu GM, Indian Bank