case study of Philips india


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case study of Philips india

  2. 2. PHILIPS INDIA LIMITED• The company was incorporated on 31st January, 1930, at Calcutta.• A Private Company under the name Philips Electricals Company (India) Limited.• In 1956 the name was changed to Philips India Private Ltd. on September 12th.
  3. 3. Cont..• In 1957 it was converted into a Public company on 31st October.• In 1967 as on 31st October, the name was changed from Philips India Private Ltd. to Philips India, Ltd.• The Company manufactures and sells radio receivers, components, amplifiers, electrical lamps, lighting fittings and accessories, medical apparatus, etc.
  4. 4. Cont..• The Companys products includes mercury and sodium lamps, light fittings and accessories radios and public address equipment; hospital and dental equipment etc.• The wake of the booming consumer goods market in 1992, PIL decided to modernize its Salt Lake factory located in Kolkata. The plants output was to increase from a mere 40,000 to 2.78 lakh CTVs in three years
  5. 5. CASE DETAILS• The case study is about the labor problems of the Philips India Limited’s PIL 1998 Salt Lake factory Kolkatta India.• Two unions active at PIL Philips Employee Union (PEU) and Pieco Workers Union (PWU).
  6. 6. Cont..• The differences with workers led to declining production and losses.• PILs management decided to sell the factory• The Union objected and made a counter bid highlighting the problems between PIL and its workers the case examines the reasons behind the conflict
  7. 7. SALT LAKE FACTORY FOCUS AND EXPANSION• The company even expected to win the Philips Worldwide Award for quality.• The Company wanted to become the source of Philips Exports in Asia Focus basically on its audio and video based products.
  8. 8. Cont..• The company relocated its audio product line to Pune in spite of the move that resulted in the displacement of 600 workers there were no signs of discord largely due to the unions involvement in the overall process.• Slowdown in the CTV market demand made the workers to think about their job due to this workers raised voices against the management and asked for a hike in wage.
  9. 9. Cont..• The difference resulted in 20 month long battle over the wages hikes issue, go slow tactics of workers declining production and huge loss for the company.• In May 1998 PIL announced to stop production in June 1998.• A series of negotiations, the unions and the management came to a reasonable agreement on the issue of wage structure.
  10. 10. SELLING TROUBLES• PIL decided to have a common manufacturing unit and integrated technology to reduce cost• Videocon approached PIL as buyer but had reservations about over staffed and under utilized plant.• PIL reduces workforce modernized plant spending Rs 7.1 crore.• Videocon confirms Kitchen Appliances India Limited as its nominee for buying the plant.
  11. 11. Cont..• PILs plan of selling the CTV unit Claimed the price of Rs 90 million was quite low against valuation of 300 million by Dalal Consultants independent values.• Workers approached the Videocon to withdraw from the deal.• They refused, workers filled petition in the Kolkata High Court challenging the sale agreement.
  12. 12. Cont..• In March 1999 Calcutta Court strikes down Philips deal with Videocon.• PIL and Videocon decided to extend their agreement by 6 months to accommodate the courts order and workers agitation.
  13. 13. JUDGMENT DAY• The Supreme Court finally passed judgment on the controversial Philips case in favor of PIL.• The judgment dismissed the review appeal filed by the workers.• The Company transferred to Videocon Workers employment was taken over by Kitchen Appliances.• The transfer of ownership did not interrupt the services of workmen Kitchen Appliances, started functioning from March 2001
  14. 14. Cont..• The factory has been design by Videocon as a major center to meet the requirement of the eastern region market and export to East Asia countries.• The judgment said that though the workers can demand for their rights, they had no say in any of the policy decision made by the company, if their interest were not adversely affected.• The Supreme Court decision taken repeats the position which Philips has maintained all long that the transaction will benefit the Philips’ shareholders.
  15. 15. CONCLUSION• Supreme Court decision seemed to be a typical case of all well that ends well.• The transactions benefited to shareholders.• How far the Slat Lake workers agreed with this remain unanswered
  16. 16. QUESTIONS
  17. 17. Changes taking place in PIL made workers feel insecure about their jobs. Do you agree with this statement? Give reasons to support your answer.• Yes,• The idea of relocating of the Pune plant had almost resulted in the displacement of 600 workers from 1 unit which in turn could possibly target their jobs also. The unions realized that the management might not be able to complete tasks and that their jobs are in danger.
  18. 18. Cont..• The slow down in the CTV markets, the workers were asked to go slow, which came down to take the decision of raising their voices against the management for a hike in wages.• The employees also retaliated stating that they continued to work in spite of the irregular hike in wages.• The union had to face another problem of being shifted under another ownership of Videocon which made them think that this company will not be able to pay the wages and they cannot trust on this company too, because Videocon faced failures to make payments in time during the course of its transactions with Philips.
  19. 19. Cont..• The decision to have common electronics facility to reduce the cost and eventually decision to sell the factory to Kitchen Appliance India Ltd were cause of their burning insecurity among the workers. And also due to which PEU demanded salary hike and the company decided to pay less hike in the salary than demanded by the worker.
  20. 20. Highlight the reasons behind PIL’s decision to sell the Salt Lake factory.Critically comment on PIL’s arguments regarding not accepting the union’soffer to buy the factory.• The unions were not willing to involve, besides there were differences in workers and hence it led to decline and losses.• The plant’s target was to reach from 40000 to 2.78 lakh CTVs in three years. There was slowdown in CTV market since the company was not able to reach the target.
  21. 21. Cont..• Expansion plans had fallen and the target was not achievedPIL reject this offer claiming that it was legallybound to sell Videocon• To reduce the recurring loses and to get out of the series of problems posed by the PEU.
  22. 22. Cont..• The company is justified to argue for not accepting the union’s offer as the workers were underutilized due to the slowdown in the sales and production of CTV.• The company even had expected to win the Philips Worldwide Award for quality but it was not able to do so• Due to decline in production the company did not become the source of Philips Exports in Asia
  23. 23. Comment on the reasons behind the Salt Lake workers resisting thefactory’s sale. Could the company have avoided this?• The factory was good because it has diversified its business continuously. The workers have no faith; they were scared for loosing their jobs as well as wages were low, therefore deciding to make the sale.• Yes, company can avoid their by giving good training good wages, motivating them company would be in profit.