The Rayoons is the biggest private sector industrial unit in Kerala known for its poor environmental and industrial relations record, has closed down. The agreement in this regard was signed on July 7 by the management and the trade unions under the mediation of the State government. For the Aditya Birla Group, owners of the unit which produced rayon-grade wood pulp and viscose staple fibre (VSF), it was the end of an increasingly embarrassing burden on its Rs.20,000 crore business empire. It meant victory for environmentalists who have for years protested against the severe pollution caused by the industry, which is located on the banks of the Chaliyar river. It may also mean relief from serious health for the people of the nine densely populated panchayats along the Chaliyar, mainly Mavoor, Vazhakkad, Peruvayal, Vazhayoor and Olavanna, caused by the toxic waste discharged from the factory.
The section that will suffer is the nearly 3,000 workers and their family members, who number over 10,000. Many of them had spent major parts of their productive lives serving the Grasim management. As per the agreement, signed in the presence of State Labour Minister Babu Divakaran, the employees are to be paid an amount equivalent to 40 days' salary for every year of completed service and also for the remaining years of service. In addition, a "special pay" of Rs.27,500 each is to be paid. The management has also agreed to pay some fringe benefits, bonus for the current year and the eligible provident fund and gratuity.
For many workers who joined the factory after 1979, this meant a compensation of Rs.2 lakhs or less. Employees with longer service, who are fewer, are expected to get around Rs.5 lakhs. In the long interval since May 1999, when the unit stopped production and the company announced a lay-off (with salary), most of the employees had reached a state of hopelessness and were willing to accept whatever compensation was finally offered. At the time of its establishment in 1957 the Mavoor unit, known then as Gwalior Rayons Silk Marketing Company Ltd., was regarded as a boon for industrially backward Kerala with a high level of unemployment. Successive governments pampered the unit with water and power supplied at heavily subsidised rates and access to the State's forests to gather raw materials at extremely low prices. But the initial goodwill, which was earned mainly on the promise of employment, soon gave way to anger and resentment against its gross violation of pollution control norms to the detriment of people living in the surrounding areas (Frontline, December 24, 1999). The unit also showed an insatiable appetite for raw materials, a major reason for the denudation of tracts of forests.
From the late 1970s, agitations and court cases had plagued the company. In 1985, when public pressure against pollution by the factory was at its peak, the management closed down the factory for nearly three years citing "labour trouble" as the reason. The hardship that it caused to the employees and their families (many workers were driven to penury; 14 of them committed suicide) brought the government to its knees. Grasim eventually succeeded in wresting more concessions from the government on the supply of raw materials and on following pollution control norms. Meanwhile, the fall in the international price of wood pulp made its import a cheaper option for the Grasim conglomerate, which has a strong presence in the textile market in India and abroad. Also, Grasim, with its five other VSF units, was already the world's largest producer of VSF (which is blended with polyester and cotton in the manufacture of fabrics). With the establishment of a plant at Harihar in its Karnataka in 1972, Grasim also became the largest producer of rayon grade wood pulp in the country. In 1998, the group acquired a joint venture pulp mill in Canada, whose entire output was meant for captive consumption in Grasim's VSF units in India, Thailand and Indonesia.
The Mavoor unit was the first in the world to manufacture rayon-grade pulp from bamboo and later from heterogeneous species of pulp wood, including eucalyptus and certain wild plants, when bamboo was in short supply. The use of heterogeneous wood was stated to have affected the quality of pulp from Mavoor. The unions alleged that this was a result of large-scale corruption by local managers of the unit who bought heterogeneous wood of inferior quality. The local managers also allegedly conveyed to the Grasim management a wrong impression about the intensity of the public ire against pollution and exaggerated figures of the cost of pollution control measures.
But the allegations were raised too late in the day. In the Grasim's scheme of things, the Mavoor plant, which had thrived on the inability of the State government to act, was going down in importance. And, as the demand for more investment in pollution control measures became intense, it became a liability. The company served a closure notice to the State government on August 23, 1999 under Section 25(o) of the Industrial Disputes Act, and it was rejected. A review petition was also rejected, and the government referred the issue for adjudication by the Industrial Disputes Tribunal in Kozhikode. Simultaneously, the Grasim management submitted a petition in the Indore High Court requesting sanction for the sale of the Mavoor units (estimated to be worth over Rs.750 crores) to a benami company at a low price of Rs.22.5 crores. The trade unions had since impleaded as a party in the case.
The section that will suffer is the nearly 3,000 workers and their family members, who number over 10,000. Many of them had spent major parts of their productive lives serving the Grasim management. As per the agreement, signed in the presence of State Labour Minister Babu Divakaran, the employees are to be paid an amount equivalent to 40 days' salary for every year of completed service and also for the remaining years of service. In addition, a "special pay" of Rs.27,500 each is to be paid. The management has also agreed to pay some fringe benefits, bonus for the current year and the eligible provident fund and gratuity.
For many workers who joined the factory after 1979, this meant a compensation of Rs.2 lakhs or less. Employees with longer service, who are fewer, are expected to get around Rs.5 lakhs. In the long interval since May 1999, when the unit stopped production and the company announced a lay-off (with salary), most of the employees had reached a state of hopelessness and were willing to accept whatever compensation was finally offered. At the time of its establishment in 1957 the Mavoor unit, known then as Gwalior Rayons Silk Marketing Company Ltd., was regarded as a boon for industrially backward Kerala with a high level of unemployment. Successive governments pampered the unit with water and power supplied at heavily subsidised rates and access to the State's forests to gather raw materials at extremely low prices. But the initial goodwill, which was earned mainly on the promise of employment, soon gave way to anger and resentment against its gross violation of pollution control norms to the detriment of people living in the surrounding areas (Frontline, December 24, 1999). The unit also showed an insatiable appetite for raw materials, a major reason for the denudation of tracts of forests.
From the late 1970s, agitations and court cases had plagued the company. In 1985, when public pressure against pollution by the factory was at its peak, the management closed down the factory for nearly three years citing "labour trouble" as the reason. The hardship that it caused to the employees and their families (many workers were driven to penury; 14 of them committed suicide) brought the government to its knees. Grasim eventually succeeded in wresting more concessions from the government on the supply of raw materials and on following pollution control norms. Meanwhile, the fall in the international price of wood pulp made its import a cheaper option for the Grasim conglomerate, which has a strong presence in the textile market in India and abroad. Also, Grasim, with its five other VSF units, was already the world's largest producer of VSF (which is blended with polyester and cotton in the manufacture of fabrics). With the establishment of a plant at Harihar in its Karnataka in 1972, Grasim also became the largest producer of rayon grade wood pulp in the country. In 1998, the group acquired a joint venture pulp mill in Canada, whose entire output was meant for captive consumption in Grasim's VSF units in India, Thailand and Indonesia.
The Mavoor unit was the first in the world to manufacture rayon-grade pulp from bamboo and later from heterogeneous species of pulp wood, including eucalyptus and certain wild plants, when bamboo was in short supply. The use of heterogeneous wood was stated to have affected the quality of pulp from Mavoor. The unions alleged that this was a result of large-scale corruption by local managers of the unit who bought heterogeneous wood of inferior quality. The local managers also allegedly conveyed to the Grasim management a wrong impression about the intensity of the public ire against pollution and exaggerated figures of the cost of pollution control measures.
But the allegations were raised too late in the day. In the Grasim's scheme of things, the Mavoor plant, which had thrived on the inability of the State government to act, was going down in importance. And, as the demand for more investment in pollution control measures became intense, it became a liability. The company served a closure notice to the State government on August 23, 1999 under Section 25(o) of the Industrial Disputes Act, and it was rejected. A review petition was also rejected, and the government referred the issue for adjudication by the Industrial Disputes Tribunal in Kozhikode. Simultaneously, the Grasim management submitted a petition in the Indore High Court requesting sanction for the sale of the Mavoor units (estimated to be worth over Rs.750 crores) to a benami company at a low price of Rs.22.5 crores. The trade unions had since impleaded as a party in the case.
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