Salt Lake Factory Issue - Philips HR

2. • Company was incorporated on 30th Jan, 1930 in Kolkata.
• Name changed Phillips India Private Limited in 1956.
• Late, name changed to Phillips India Limited from Philips India Pvt. LTD
• Company manufactured radio receivers, electrical components, amplifiers,
lightings etc
• Market boomed in 1992, Philips India limited decided to alter theur salt lake
factory located in Kolkata with a vision to expand the production from 40k to
2.8lac CTVS in 3 years.

3. The case study tells about the labor issues of the Philips India limited which happened in their
salt lake factory. Two unions active at Philips India limited were Philips Employee Union and
Pieco Workers Union. The difference between the workers and the company le to fall in
production and losses.
Company’s management decided to sell the factory. Union objected & made a counter bid
highlighting the problems between company & its workers the case tells about the reason
behind the conflict.

4.  Company was expected to win the Phillips worldwide award for quality.
 The company wanted to become the source of Phillips Exports n Asia focus basically on its
audio & video based products.
 The difference resulted in 20 Months long battle over the wages hike issues, go slow tactics
of workers declining production causing huge loss to the company.
 In may 1998, Phillips India decided to stop the production. After series of negotiations, the
unions & the management came to a reasonable agreement on the issue of wage structure.

5. Philips India limited decided to have a common manufacturing unit and integrated technology
to reduce cost. Videocon approached Philips India limited as buyer but had reservations about
over staffed and under utilized plant. Philips India limited reduces workforce and they
modernized plant by spending Rs 7.1 crore. Videocon confirms Kitchen Appliances India
Limited as its nominee for buying the salt lake plant. Philips India limited’s plan of selling the
CTV unit Claimed the price of Rs 90 million was quite low against valuation of 300 million by
Dalal Consultants values. Workers approached the Videocon to withdraw from the deal. They
refused, workers filled petition in the Kolkata High Court challenging the sale agreement.

6. In March 1999 Calcutta Court strikes down
Philips deal with Videocon. Philips India
Limited and Videocon decided to extend their
agreement by 6 months to accommodate the
courts order and workers agitation.

7. The Supreme Court finally passed judgment on the controversial
Philips case in favor of Philips India Limited
.
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

8. The factory has been designed 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

9. Supreme Court decision seemed to be a typical case of all well that ends
well. I strongly support this decision. The transactions benefited to
shareholders. Share prices gained up. There are still no evidence that
labors agreed to this or not.