Loss-making MPM seeks closure

Loss-making MPM seeks closure

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The state-owned publicly listed Mysore Paper Mills Ltd (MPM) has sought closure of its operations in view of mounting losses. This will result in a loss of 240 jobs as a majority of its workers have already accepted voluntary retirement. 

The company has sought approval from the Karnataka Labour Department to wind up its manufacturing activities, the company said in a note sent to the secretary of the department. The state government owns 64.74% stake in the company, while the rest lies with the public — including IDBI Bank and LIC. For the year ended March 2018, the company’s net losses doubled to Rs 295 crore from Rs 158 crore in the year-ago period.

“....in view of the mounting losses incurred over successive years and as directed by the state government, which is a major stakeholder, (the company) has filed a Form of Notice before the Secretary, Labour Department, Karnataka seeking permission for closure of the operations (manufacturing activities),” the company said in a note to all the stakeholders.

The move follows the decision by the government to lease out operations of sugar and paper divisions of the company to a private entity.

The company had already implemented a voluntary retirement scheme (VRS) for its workforce during 2017-18 and sent a part of its regular workforce on deputation to other organisations. Of the 2,409 workers, 2,031 opted for VRS. The government in August 2017 allocated Rs 345 crore towards the voluntary retirement scheme and severance package for the workers. With the closure, the services of 240 workmen at the company would be terminated.

Mysore Paper Mills Ltd was founded by Krishnaraja Wodeyar Bahadur in 1936 at Bhadravati in Shivamogga district. Later, it became a government company.

The company has sought the closure of operations under sub-section (1) of Section 25-0 of the lndustrial Disputes Act, 1947. The company’s shares are listed on the Bombay Stock Exchange. However, trading in its stock was suspended in June 2017 due to penal reasons.

The section states that an employer who intends to close down an undertaking of an industrial establishment applies shall: “In the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner.”

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