It is a paradox that the Palakkad unit of Instrumentation Ltd., a Central public sector unit set up in 1974 and making profit since its inception, continues to struggle for survival.
The prospects of the unit turned for the worse two decades ago when the main unit at Kota went into the red.
The Russian technology acquired through collaboration, monopolistic business environment, and over-reaching government support helped the company fly high till the 1990s when the government opened up the economy.
The entry of foreign companies with superior semi-conductor technology combined with sluggish operations made the company a loss-making one, N. Sudarshan, general secretary of the Instrumentation Employees Union, said.
Since the Palakkad unit had control valves as products, this mechanical product did not under go drastic improvement.
Indigenisation of products with Japanese collaboration and a comparatively disciplined working environment helped the unit sustain business and profitability, said K.E. Padmakumar, vice-president of the Instrumentation Workers Union.
In 2008-09, the turnover of the company was Rs.253 crore with a record loss of Rs.68 crore. During this period, the Palakkad unit increased its turnover to Rs.91.74 crore and profit by Rs.20 crore.
In 2010-11, the turnover of the company was Rs.249 crore with a loss of Rs.36.5 crore. But the unit here increased its turnover to Rs.101.96 crore and profit by Rs.22 crore.
“The demand to delink the Palakkad unit has been there from the very beginning. But the headquarters at Kota could convince the government that it would be detrimental to the company if the profitable unit was separated. So this move was effectively stalled,” said K.A. Raveendran, general secretary of the Instrumentation Workers Union.
The union leaders said if the Palakkad unit was allowed to function independently, it could make enough profit to take care of the entire company.
When the late K. Karunakaran was the Union Industries Minister, he decided to separate the Palakkad unit. Before he could implement the decision, election notification was issued and the decision was kept in abeyance.
The first revival package of the company was approved in 1999 by the BIFR which envisaged subsidiary units under a holding company.
Accordingly, the Palakkad unit was registered as Instrumentation Control Valves Limited and a joint venture partner was sought.
In 2004, the Union Cabinet decided to hand over 51 per cent shares of the new subsidiary company to Larsen & Toubro for Rs.16.5 crore. But this decision also did not work out as the management realised the dangers of separating the Palakkad unit as there were no suitors for any other unit, Mr. Padmakumar.
He said the provision of working capital assistance from the BHEL to the company as per the second revival plan had proved detrimental for the unit.
“The BHEL extends Rs.25 crore annually as advance for making its products, which are made at the Palakkad unit. But the fund-starved company headquarters, without any solid business, uses the fund for salaries at Kota,” he said.
“The employees here feel that their long wait for ‘freedom' is too long and the authorities concerned should address the issue soon. The only lasting solution is to merge the Palakkad unit with the BHEL due to business synchronisation and mutually advantageous business solution,” the union leaders said.
