A threat by Muthoot Finance Limited (MFL) to down shutters of half of its 600 branches in Kerala in the wake of weeks-long strike by a group of employees has raised several questions on the investor-friendly approach of the left-ruled south Indian state.
While a major section of people in the state view it as an adverse development that would further tarnish the investor-friendly image of Kerala, while another group is supporting the demands of the Communist Party of India - Marxist (CPI-M) affiliate CITU-backed Non-Banking and Private Finance Employees Association, which has declared an indefinite strike on August 20.
A recent suicide of an NRI businessman, Sajan Parayil, who could not get an approval for his Rs 15 crore-convention centre from a left-controlled municipal corporation in north Kerala, also gives credence to the argument that investors look for other states for starting their ventures.
The Rs 36,000 crore-Muthoot Finance, India's largest gold financing company with more than 5,000 branches in terms of the loan portfolio, would close down around 300 branches permanently in a phased manner if there is no other option, George Alexander Muthoot, managing director of MFL told reporters. He was speaking to the media after a day-long sit-in by him before the corporate office in Kochi on Tuesday (September 3) in protest against a group of employees not allowing the corporate office to function.
The non-banking finance company (NBFC) has appointed a chartered accountants' firm to find out buyers for its gold loan portfolio of some of its branches giving a clear indication that it will wind up its operations in half of the branches.
Muthoot said the Kerala portion of the company's business had come down to 4 per cent of the total business from the previous level of over 10 per cent, mainly due to the frequent strike by some employees. Over the past two years, there were strikes that had severely affected the company's business.
Ploy To Stop Agitation
However, employees claimed that the threat to close down branches was a ploy to stop the agitation and they would not buckle under pressure. "It is a pressure tactic. Employees who have put in 10 years, are drawing a meagre salary of Rs 8000-10,000 and their working condition is really pathetic. The firm is making enough profit but not even one per cent is percolating down to its employees," CITU State Secretary K N Gopinath said while justifying the strike.
Of the 2,800 employees in the state, merely 200-250 are members of the union, said MFL Deputy General Manager Babu John. But they seek outside forces to disrupt work. He said more than 70 per cent employees are women and they were physically attacked when they came for work.
Muthoot Finance also claimed that it offered one of the best pay packages in the industry. Apart from salaries, employees were given frequent incentives, bonuses, a pension scheme and employees' stock option.
Drops Headquarters Plan
Muthoot also said the company had abandoned its plans to have its new headquarters in Kerala because of frequent strikes and business losses.
As the whole issue has gone out of proportion, the state government has convened a meeting between the management and the striking union later today. Kerala's Labour Minister T P Ramakrishnan is expected to attend the meet. However, the management said it is yet to decide whether to attend the meeting or not.
"Majority of our employees are not union members. Then why should we attend it?" asked the management. But employees said the company was planning to tone down its workforce, citing the present climate.
MFL registered an 8 per cent rise in first-quarter profit at Rs 530 crore, as against Rs 492 crore in the same period a year ago.