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HRM-901
Case study on
Philips India labour problem in Salt Lake
Submitted by:

Name: Registration no: Section:

Joy gupta 11719031 K0048
Mrinmoy Sarkar turjo 11719983 K0048
Kazi Fazila Tasneem 11719877 K0048
Bhanu Pratap mahato K0048
Sayban kumar yadav 11718995 K0048
 SUMMARY

The Philips Company was founded in 1891, by Gerard Philips and his father Frederik
Philips. Frederik, a banker based in Zaltbommel, financed the purchase and setup of an empty
factory building in Eindhoven, where the company started the production of carbon-filament
lamps and other electro-technical products in 1892.

Philips is registered in the Netherlands as a Naamloze Yennootschap and has its global
headquarters in Amsterdam. At the end of 2013, Philips had 111 manufacturing facilities, 59
R&D Facilities across 26 countries and sales and service operations in around 100 countries.

Philips is organized into three main divisions: Philips Consumer Lifestyle (formerly Philips
Consumer Electronics and Philips Domestic Appliances and Personal Care), Philips Healthcare
(formerly Philips Medical Systems) and Philips Lighting. Philips achieved total revenues of
€22.579 billion in 2011, of which €8.852 billion were generated by Philips Healthcare, €7.638
billion by Philips Lighting, €5.823 billion by Philips Consumer Lifestyle and €266 million
from group activities. At the end of 2011, Philips had a total of 121,888 employees, of whom
around 44% were employed in Philips Lighting, 31% in Philips Healthcare and 15% in Philips
Consumer Lifestyle.

Philips invested a total of €1.61 billion in research and development in 2011, equivalent to
7.10% of sales. Philips Intellectual Property and Standards is the group-wide division
responsible for licensing, trademark protection and patenting. Philips currently holds around
54,000 patent rights, 39,000 trademarks, 70,000 design rights and 4,400 domain name
registrations.

Philips in India
Philips began operations in India in 1930, with the establishment of Philips Electrical Co.
(India) Pvt Ltd in Kolkata as a sales outlet for imported Philips lamps. In 1938, Philips
established its first Indian lamp-manufacturing factory in Kolkata. In 1948, Philips started
manufacturing radios in Kolkata. In 1959, a second radio factory was established near Pune
This was closed and sold around 2006. In 1957, the company converted into a public limited
company, renamed "Philips India Ltd". In 1970, a new consumer electronics factory began
operations in Pimpri near Pune. This is now called the 'Philips Healthcare Innovation Centre
Also, a manufacturing facility 'Philips Centre for Manufacturing Excellence' was set up in
Chakan, Pune in 2012. In 1996, the Philips Software Centre was established in Bangalore later
renamed the Philips Innovation Campus. In 2008, Philips India entered the water purifier
market. In 2014, Philips was ranked 12th among India's most trusted brands according to
the Brand Trust Report, a study conducted by Trust Research Advisory.

Analysis
The case studies the labour problems of the Philips India Limited's (PIL) Salt
Lake factory in Kolkata, India, around 1998 when differences with workers led to declining
production and losses. When PIL's management decided to sell the factory, the Union objected
and made a counter bid. There are two union is active at PIL Philips India limited Philips
employee union (PEU) and pieco workers union (PWU).

Selling blues:

The 16th day of March 1999 brought with it a shock for the management of Philips India
Limited (PIL). A judgement of the Kolkata1 High Court restrained the company from giving
effect to the resolution it had passed in the extraordinary general meeting (EGM) held in
December 1998. The resolution was to seek the shareholders' permission to sell the color
television (CTV) factory to Kitchen Appliances Limited, a subsidiary of Videocon. The
judgement came after a long drawn, bitter battle between the company and its two unions (PU)
Philips Employees Union (PEU) and the Pieco Workers' Union (PWU) over the factory's sale.

Souring ties:

PIL's operations dates back to 1930, when Philips Electricals Co. (India) Ltd., a subsidiary of
Holland based Philips NV was established. The company's name was changed to Philips India
Pvt. Ltd. in September 1956 and it was converted into a public limited company in October
1957. After being initially involved only in trading, PIL set up manufacturing facilities in
several product lines. PIL commenced lamp manufacturing in 1938 in Kolkata and followed it
up by establishing a radio manufacturing factory in 1948. An electronics components unit was
set up in Loni, near Pune,

In 1963, the Kalwa factory in Maharashtra began to produce electronics measuring equipment.
The company subsequently started manufacturing telecommunication equipment in Kolkata

Selling troubles:

In the mid-1990s, Philips decided to follow Philips NV's worldwide strategy of having a
common manufacturing and integrated technology to reduce costs. The company planned to
set up an integrated consumer electronics facility having common manufacturing technology
as well as suppliers base. The company selected Pune as its manufacturing base and decided to
get the Salt Lake factory off its hands. Though initially Videocon seemed to be interested, it
expressed reservations about buying an over staffed and under-utilized plant. To make it an
attractive buy, PIL reduced the workforce and modernised the unit, spending Rs 7.1 crore in
the process

In September 1998, Videocon agreed to buy the factory through its nominee, Kitchen
Appliances India Ltd. The total value of the plant was ascertained to be Rs 28 crore and
Videocon agreed to pay Rs 9 crore in addition to taking up the liability of Rs 21 crore. Videocon
agreed to take over the plant along with the employees as a going concern along with the
liabilities of VRS, provident fund etc. The factory was to continue as a manufacturing center
securing a fair value to its shareholders and employees...

Judgement day:

The supreme court finally passed the judgement of the controversial Philips case in the favour
of Philips India’s limited (PIL). The judgement dismissed the review appeal filed by workers.
The company transferred to the Videocon workers employments taken over the video
appliance. The transfer of the ownership did not interrupt the services and the term & condition.
videocon kitchen appliance started functioning from march 2001.
 Solution

 Market boomed in 1992, (PIL)Philips India limited should not decide to alter their Salt
Lake factory alter in Kolkata with the vision to expand their production to 40k to 2.8lac
CTV in 3 year.

 (PIL)Philips India limited should not Relocation of its Audio video product in Pune as
a result displacement of 600 workers.
 Philips India limited (PIL) should have assured the workers that they will not be fired.

 The company could relocation their factory as well as labour so that the fear of losing
job never comes in their mind.

 (PWU) Philips workers union raised voices for not to sell the factory. If (PIL) did not
want to sell the factory PWU was not went to Kolkata high court to filled petition.

 If their capacity expansion plan did not fail in 1992 then the Union have their faith to
the management

 PIL capacity expansion plan should be analyse carefully for future investment in 1992

 The workers should have accepted Videocon as their employer

 The workers did not have a faith to the Videocon employer that they will not pay their
wages properly
  Philips India limited should have do some work to their workers that they believe
Videocon kitchen appliance company will produce CTV unit

 (PIL)Philips India limited can run their factory with a joint venture or partnership to
avoid this situation

Conclusion
In the wake of the booming consumer goods market in 1992, PIL decided modernize its Salt
Lake factory located in Kolkata. PIL wanted to concentrate its audio and video manufacturing
bases of products to different geographic regions. In line with this decision, the company
relocated its audio product line to Pune. By 1996, PIL’s capacity expansion plans had fallen
way behind the targeted and they faced some huge loss. Videocon seemed to be interested, it
expressed reservations about buying an over staffed and underutilized plant. To make it an
attractive buy, PIL reduced the workforce and modernised the unit, spending Rs 7.1 crore in
the process. In September 1998, Videocon agreed to buy the factory through its nominee,
Kitchen Appliances India Ltd. The group of FI shareholders comprising LIC, GIC and UTI
initially opposed the offer of sale.” S. N. Roy Choudhary of the Independent Employees
Federation in Calcutta said, “The sale will not profit the company in any way. As a
manufacturing unit, the CTV factory is absolutely state-of-the-art with enough capacity. The
unions challenged PIL’s plan of selling the CTV unit at ‘such a low price of Rs 9 crore’ as
against a valuation of Rs 30 crore made by Dalal Consultants independent valuers. PIL officials
said that the sale price was arrived at after considering the liabilities that Videocon would have
along with the 360 workers of the plant as well as Voluntary retirement scheme (VRS) In
December 2000, the Supreme Court finally passed judgment on the controversial Philips case.
It was in favour of the PIL. The judge said that though the workers can demand for their rights,
they had no say in any of the policy decisions of the company, if their interests were not
adversely affected.

They (unions) should realize that they are just one of the stakeholders in the company and have
to accept the tyranny of the market place.