Q1. CASE STUDY 1: Industrial Relations (Amazon Textiles)

Amazon Textiles was located in the old industrial district of Bombay. The Company was established in 1870 and has seen several ups and downs. It suffered extensively on account of the export and import policy of the British regime, whose main aim was to discourage the growth of the Textile Industry in India and use the country as a supplier of material for the Textile Industry in Manchester, UK. The Promoter of the Company, Mr. Manoj Birla, was a patriot. He was closely associated with the freedom struggle/ movement. He was a liberal man and had a paternalistic approach towards the Employees. The growth of Trade Unions during his period (1870-1930) was minimal, since the Trade Union leaders were also co-leaders in the independence movement.

After the demise of Mr. Manoj Birla, his son Mr. Sanjay Birla took over as Chairman of the Company. He shifted the focus of the Company from pure silk to other categories of textile goods, such as cotton, polyester, etc. During the process, he modernized the looms and the machinery, in order to increase productivity. However, he did not increase the wages of the Employees over a period of one decade, during which the productivity of the Company rose by 20%. The Trade Union leaders could see through the ploy of Chairman. They became vociferous and demanded higher wages. There were two violent agitations and strikes by the two Trade Unions, who were also supported by the leaders of the independence movement. In order to improve his business prospects, Mr. Sanjay Birla sided with the Britishers, much to the annoyance of the leaders of the independence movement. Mr. Sanjay Birla died in an air crash in 1946. At this juncture, Mr. Sanjay Birla's younger brother Mr. Yash Birla took over as Chairman of the Company. He was the true son of his father and a loyal patriot who strongly supported the independence movement. His style of management was paternalistic and caring. He was proactive in wage revision of the Employees.

The situation was peaceful till the 1970s until Mr. Mohan Samant, a powerful Trade Union leader in Bombay's industrial circles arrived on the scene. The latter believed in adopting a confrontationist attitude towards the Management, irrespective of whether or not it was just. He tried to influence the Trade Union leaders in the Company, but with little success. During the mid-1980s, there was a serious crisis in the Textile Industry and Amazon Textiles was not an exception. There was a sharp decline in exports as well as in domestic sales, which led to a sharp drop in profits and suffered losses over a continuous period of four years. The banks and financial institutions refused to refinance the sick company and Mr. Yash Birla began to scout for an opportunity to turn around its fortunes. At this juncture, he could foresee that the denim market would expand in a big way over the next 10 years and immediately set up modern textile mills in Ahmedabad to exclusively manufacture branded and generic denim.

The modern units in Ahmedabad flourished while the sick units in Bombay could not be turned around since the cost of modernizing them was prohibitive. After detailed discussions with the trade unions, Mr. Yash Birla convinced them that it was best to close down the sick mills in Bombay. Those desirous were relocated to the new units in Ahmedabad and the option of VRS was given to the other workers.

QUESTIONS

(i)Examine the socio-political influence of the growth and development of Trade Unions on the Company.

(ii)Analyze the inter-relationship between the approach of the Management and Trade Union activism.