CASE STUDY ON IMPLA PHARMACEUTICAL PVT LTD

 Impla Pharmaceuticals limited

Padmini Laboratories Private Limited was established by Viral Patel in 2001, at Surat. He is a soft spoken gentleman, a Ph.D. in chemistry, who did not believe in working under pressure. The company was a small scale unit manufacturing non patented anti-malarial medicines. The company had 6 days per week, making 26 working days per month and was running smoothly. In 1998, CITU – supported union came into existence. The industrial relations started deteriorating making it difficult for the company to survive. In 2002, Viral Patel decided to enter into partnership with three other partners, Pratik Patel, Minkal Patel and Nilesh Patel to overcome the difficulties faced by him. The company came to be known as Pdmini Laboratories Limited. Even after this, the industrial relations did not improve till 2002 and it was during this period that 14 workers were sacked. In 2002 Viral decided to sell his shares to Shivam Pharmaceuticals, a multinational though other partners continued. Now, the company was called German Drug House (GDH). During this period CITU withdraw support to the union and Bhartiya Mazdoor Sangh (BMS) came into the picture. An average increment of Rs. 225/- was given to all workers and industrial relations improved to some extent.

IMPLA Pharmaceuticals Limited was another non-patented antimalarial bulk drug manufacturing giant having units at Pune, Mysore, Hyderabad, and Coimbatore and had its corporate office at Baroda. It wanted to have monopoly in the antimalarial drug manufacturing by taking over GDH, but before taking such a step, they wanted to assess the internal condition of the company. Therefore, in January 2006 Devang Patel, a qualified chartered accountant was inducted as director by purchasing a requisite number of shares of the company. In September, 2006 after IMPLA was convinced about the favorable conditions of GDH, It formally took over the company. At that time the men power strength of the plant was 210 in which 130 were workers and 80 were executives and staff members. 

After taking over, IMPLA made many changes and the major ones were:

1.    They increased the salaries of executives and staff of the unit to reduce the gap in the pay structure of the executive and staff of this unit and their other units.

2.    They invested Rs. 3-4 Crore for up-gradation of the plant.

3.    They shifted from 6 days working per week to 7 days so as to improve the productivity and enhance cost effectiveness of the unit.

The shift from 6 days to 7 days working without any financial gains made workers resist the change. At this juncture, Sham Magar, Corporate Manager (IR) intervened and promised the workers that they would be paid for 30 days instead of 26 days, but Ravi Kansagara, Director (Personnel), Devang Patel, GM (Operations) refused to agree to this since they were not involved when Sham Magar made the commitment. The promise was not fulfilled which further complicated the problems. The issue kept on lingering for 6 months. No decision could be taken because of the difference of opinion among the senior executives. In June, 2007 the workers geared Devang Patel to pressurize the management to take the decision. They were successful to some extent as it led to the agreement of the management with workers that financial benefits would be given with retrospective effect of 4 years making it one additional year over and above 3 years of normal agreement. They were asked to give a notice of change which the workers could not give till December, 2007 because of disagreement among themselves. It was felt at this point of time by Devang Patel that plant should have an Assistant Manager (Personnel) instead of having Personnel officer. Parag Soni, Assistant Manager because of discord in opinions of Devang and Sham.

In December, 2007, the workers gave a notice of change demanding an increase of Rs. 2200/- per month. In January, 2007, a notice of change was given by the management. In February, 2007, the negotiations started and continued till July, 1996. Devang, Chirag, the new Corporate Manager (IR), Parag Soni were to represent the management side and nine members of the union were to represent the workers, beside Sanket Kanabar, the General Secretary of BMS.

The first two rounds, of meeting did not lead to any outcome as none of the parties were ready to budge. This made Sanket Kanabar withdraw as he was fed up with the rigid stand of the union leaders.

The third meeting was held without Kanabar wherein the union leaders came down to Rs. 1200 from Rs. 2200 per month. The minutes of the meeting were jotted down but the union leaders refused to sign. Talking advantage of the occasion, Parg soni and Devang Patel had a secret meeting with Kanabar in a hotel. Kanabar advised the representatives of the management to maintain a low key for a few months to crack down the workers’ aspirations who had very high expectations. It was observed by Parag Soni that there were perceptual differences between senior and junior union leaders.

Talking cue from this, Parag Soni adopted a policy of divide and rule and took into confidence Ankush Thakur, the senior union leader and had a secret meeting with him to explore the last settlement amount and apprised him that the management could go only up to Rs.450. He also took Nilesh Dobaria, the junior union leader into confidence and convinced him that management was not going to bend before their demands and as such the workers were going to be the ultimate sufferers. Beside this, Parag Soni spread the message that no wages would be given retrospectively.

The next day meeting resumed, in which union representatives came down to Rs. 750 (because of the pressure from the workers) beyond which they were not ready to come down. It was decided that instead of having meeting which all the members, only two members, one senior union leader, Ankush Thakur and one junior union leader, Nilesh Dobaria would sit in the negotiations. Immediately a meeting among Devang Patel, Chirag Patel, Ankush Thakur and Nilesh Dobaria was held and it was resolved that Rs. 575 average per month would be given for 4 years retrospectively. An MOU was drafted by the legal consultant at the corporate office and was duly signed by Devang Patel, Chirag Patel, Parag Soni and all the union representatives. In the evening a dinner was hosted in which all the negotiators were invited. When the papers were sent to Ravi Kansagara, he objected to the MOU on two points.

First, the other plants were having 30 days per system leading to less average pay per day and in surat plant it was to be given for 26 days leading to higher average per day. Second, the milk allowance given for overtime at surat unit was higher than other units. It took Devang Patel and Chirag Patel two months to convince Ravi Kansagara about the agreement and thereafter, implementing the same. A total amount of Rs. 14 to 15 lakh was given to all the 160 workers within a week as arrears and the issue was settled.


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