Industrial

 Relations  at  Asian  Paints

Case  Study  Submission

Syndicate Group 9, ePGPX-03

Abhishek Raj: ePGPx03.053

Chinmoy Sarkar: ePGPx03.007

Diwakar Bishnoi: ePGPx03.051

Gurpreet Bhimber: ePGPx03.037

Rohan Goel: ePGPx03.052

Stuti Birje: ePGPx03.026

Subhajeet Dey: ePGPx03.038

Executive  Summary
This case highlights the aspects of industrial relations in case of Asian Paints. The General Works Manager (GWM), Jatin Gangwal,
had a discussion with Alok Singh, Production Manager regarding the stoppage of production line at the factory. The company had very
promising targets to achieve and the delay was affecting the commitments planned for the customers.

The product line was stopped because of refusal of Ramesh, Union Leader, who refused to start the production line. In the past,
between 1991 and 1992, there was a loss of INR 3 crores due to stoppage of work. This stressed out Jatin Gangwal even more who
wanted to avoid repeating the history.

There is a dual level analysis needed to solve this situation. One that involved profits and growth, and second was the respect and
dignity of the employees.

Profits  and  Growth Employee  Relationship

Company Background

Started   operations  in  

1942.  Operated  in  1 9  
Countries,  h ad  2 6  p lant  
manufacturing  facilities,  
serving  in  6 5+  Countries

Partnership  firm  setup  by  4  friends.  In  

span  of  2 5  years,  became  India’s  l eading  
paint  c ompany

Present  in  4  segments  – interior  wall  

finishes,   exterior  wall  finishes,   enamels  and  
wood  finishes

2  chemical  manufacturing  facilities  – Ankleshwar,   Gujrat  and  

Cuddalore,   Tamil  Nadu.  Setup  as  backward  integration  
initiatives  

Cuddalore factory  divisions   – Administration,   Production,   Engineering  

Maintenance  &  Operations,   Accounts  and  HR
 Accolades

• Forbes  Asia’s  “Fab  50”  list  of  Companies  in  Asia  Pacific  in  2011,   2012,  2013  and   2014

• “200  Best  Small  Companies   in  the  World”  in  2002  and  2003  by  Forbes  Global   Magazine  USA

• “Best  under   a  Billion”  award.  Only  paint  company  in  the  world   to  receive  this   recognition

• “Best  under   a  Billion  companies  in  Asia”  in  2005,  2006  and   2007

• Most  “Impactful  companies  of   the  Decade”  by  CNBC  Awaaz in  Jan  2015
Organization  Hierarchy  and  Key  Stakeholders

General  Works  
Manager

Senior  Managers  
(Division)

Managers

Executives

Engineers

Workmen   /  
Operators
§ Jatin Gangwal – General Works Manager: Wants to avoid trouble, courteous to Ramesh, rationale in approach
§ Alok Singh – Production Manager: Veteran, expert in manufacturing, 15 years of exp, provided support to Ramesh
§ Namboodiri – Plant Personnel Manager: Firm with policy, did not go down with threats, provided support to Ramesh
§ Ramesh – Union Leader: Rude, disruptive, instigated trouble and unrest, not rationale, has support from Union President
Trade  Union

§ After 1987 (when plant was commissioned), workmen had organized themselves and had formed a representative committee.

§ A wage settlement was signed for Rs 150/month given to each workmen. This expired in Dec, 1989 after which the workers under

banner of South Indian General Union, presented another charter of demands to increase wages.

§ Immediately after this, the union changed name and style to People Progressive Thozhilali Sabha (PPTS).

§ In 1991, management signed 3 year wage agreement with PPTS. Management accepted the demand of the workmen and provided

a hike of Rs 550 per month.

§ There was an agreement that no revision in wages will be entertained for a period of 3 years until 1994. And, union will not cause

any financial burden to management group.

§ In Nov 1991, during Diwali, management decided to distribute half KG of sweets. The workers refused it and demanded 1 KG of

sweets. The management did not accept the demand.

Global  Factors,  Performance  Outcome  and  Union  Revolt
§ Post Gulf war, Oil prices had escalated across the world. The consumer price index (CPI) inflation also increased during the same
time which escalated the commodity prices although it decreased from 1991 (13.88%) to 1992 (11.88%).
§ Workmen approached management in 1992 to consider economic relief of Rs. 550/month. As the settlement was signed a year back,
management refused to provide additional relief. The plant was incurring losses and had not reached breakeven which the union was
already aware of.
§ In April 1992, after the annual performance appraisal, the management announced special increments for only three white-collared
employees taking into consideration their performance in the previous year. Interestingly, these 3 were part of the settlement with the
union.
§ PPTS demanded all workmen should be given special increments. Union mention that there was no clause for special agreements.
§ The management, taking note of the same, and anticipating unrest situation, came out with relief of Rs 75/month in May 1992.
§ Union refused the same and demanded Rs. 500/month and special increments. Union stated putting pressure and indulged in
misconduct. Between May and July 1992, workmen started abusing and threating Managers and Engineers, avoiding SOP. They
tampered with fire extinguisher, left factory premises without consent and threatened management that they will beat them with
cycle chains and sickles.
Revolt  and  Action
§ Management thought that Union’s actions will subside but they got further escalated.
§ Workers sabotaged machines, affecting quality and bringing down the production.
§ In August 1992, an engineer was assaulted by workmen during night shift. Management decided to conduct domestic inquiry.
§ The workmen was suspended which the Union revolted against and gave a notice of strike on August 15, 1992.
§ The Union kept on pressurizing the management even though they knew the company was not making profit.
§ Eventually, the Union did conduct the strike and motivated workmen not to function. During this period, the management kept on
showing high degree of patience, fairness and transparency.
§ On August 15, the management had to call police to calm down the situation. They declared a lockout. This resulted in dismissal of
leaders and workmen who had indulged in misconduct activities. This was resolved with following agreements:

– Workmen  will  not  get  interim  relief  and  special  increments

– Dismissed  workmen  will  not  be  taken  back  on  rolls,  and  50%  wages  will  be  paid  to  the  dismissed  workmen  till  the  court  
pronounced  its  verdict
– Union  will  give  a  joint  undertaking   on  behalf  of  the  workmen,  and  there  will  be  no  individual  undertaking
– Wages  for  the  lockout  period  would  be  decided  by  the  court  and  both  parties  will  adhere  by  its  verdict
Series  of  Events
Day 1 Meeting: Aug 24, 1993
§ Participants: Jatin Gangwal (General Workers Manager), Alok Sing (Production Manager), Namboodiri (Plant Personal Manager), Ramesh (Union
Leader)
§ Ramesh was being transferred to Production department from QA division and he was not ready to make the change. He thought he was given lower
level job.
§ Management mentioned the job rotation policy but Ramesh asked more time to think.
§ Management gave him 2 days and Ramesh left abruptly from the meeting.
§ Ramesh sought intervention from Union Leader President to reinstate him to QA department. Union President put pressure on personal manager who
in-turn explained the job rotation policy.
§ Refusal continued for 46 occasions in the span of 2 months. Ramesh was counseled several times by supervisors - Alok and Jatin. His colleagues too did
the same. But, Ramesh continued to refuse. He was issued warning letters as well. Everyone started thinking that management was being easy with him
as he was the Union leader.

Day 2 Meeting: October 26, 1993

§ Ramesh firmly mentioned that he did not want to work in Production department. Namboodiri mentioned that domestic inquiry will be started. Ramesh
told Namboodiri that he could “do anything he wants”. Namboodiri provided counselling about the consequences but nothing actually worked out.
§ After the meeting, under management discussion, Namboodiri recommended that the company should dismiss Ramesh.
Standard  Operating  Procedures
As per collective bargaining process, an employer and trade union should follow process to solve the problems. As per Supreme Court
of India, there is a process that has to be followed. The premise of discussion is to mutually agree and not use force.

Charter of Demands: Representative of Negotiation: Both parties negotiate until agreement is

trade union issues charter of demands reached
1 2

Compulsory Arbitration or Adjudication: Collective Bargaining Agreement:

When conciliation fails, parties may either 6 3 Collective bargaining agreement is
resort to arbitration executed, settling out employment terms
and work conditions

Conciliation: State government may appoint

conciliation officer. Workers are prohibited 5 4 Strikes: If both parties fail to reach agreement due to
mutual consensus, Union may on a strike in
to go on strike during this time. Outcome:
accordance with Industrial Dispute Act 1947
settlement, no settlement, reference made to
labor court
Situation  Analysis Management  Behavior
Patient,  never  lost  cool,  provided  
ample  support   and  counseling,  
gave  several  opportunities   for  
Ramesh   to  change   position.  
Decision  to  give  special  i ncrement  
to  3  white-­collar  people  should   be  
revisited

Ramesh  (Union  Leader) Safety  and  Growth

Management   had  to  ensure  
Rude,   provoked   workmen  to   safety  of  employees  and  
carryout  misconduct   activities,   couldn’t   continue   with  
did  not   do  the  right  thing,  halted   production   losses.  They  had  
production,   put   the  safety  of   to  make  money  and   for  this  it  
people   in  j eopardy   was  important  to  take  strong  

Decision   decisions

Framework

Fairness
Union  President Management  was  fair  and  provided  
facilities  as  per  their  ability.  Even  
Supported  Ramesh,  did  not   though   they  were  not  profitable,  
carry  out  a ny  s elf   they  still  thought  about  the  
investigation,  tried  to   workmen.  Union  tried  to  take  
advantage  of  the  management  and  
influence  management
did  not  follow  SOP’s  while  trying  to  
negotiate
Firing  Ramesh  is  not  feasible  in  short  term  (following  legal  methods).  This  will  further  lead  to  strike  and  loss  of  
production  as  Ramesh  has  good  backing  from  Union  President.  For  management,  maintaining  discipline  in  the  
plant  is  of  prime  importance.  They  cannot  risk  the  security  and  safety  of  employees.  It  doesn’t  appear  that  
Ramesh  will  be  productive  in  longer  run.  He  will  likely  cause  more  issues.  Even  if  management  agrees  with  
Ramesh,  the  management  could  be  held  ransom  in  future.  
Recommendation:  The  Check-­‐Mate  Theory

Plan  of  Action

Objective:  In   short  term,  avoid  further  production   loss  and  prioritize  
employee  safety.

In   long  term,  focus  on   growth  and  continuous   support  from  Union.  

• Tell   Ramesh  to  continue   in  QA  department  and  in  parallel  ask  him  
start  looking   in  the  Production   environment  for  some  time.  
• The  short-­term  goal  should   be  to  reduce  Ramesh’s  dependency  in  
QA  department.  Eventually,  the  management  should   develop  strong  
relationships  with   the  Union   President  .  
• Management  should   continue  to  showcase  their  support  for  
workmen.  Also,  imbibe  in  their  mind  that  strike  will  eventually  
impact  their  life  more  than  companies  growth.    
• Try  to  incrementally  replace  the  employees  1-­2  level  below  Ramesh.  
• Use  political   intervention  and  plan  for  Ramesh’s  replacement  in  3-­6  
months.