HNL Disinvestment Drive: Employees Face Uncertain Future

Ever since the Modi has come to power, the disinvestment drives in Central Public Sector Enterprises have gained momentum with the NITI Aayog, think tank of the Centre, making a list of companies that have to be disinvested. The Hindustan Newsprint Limited (HNL) which is located at Velloor in Kottayam District of Kerala is among those.

“We have not been paid the salaries for last eight months. We borrowed money as much as we can and now we are forced to find other jobs to feed ourselves and our kids,” says Madhu (name changed), a permanent employee from the Hindustan Newsprint Limited (HNL) which is enlisted for disinvestment.

Like Madhu, as many as 364 regular employees and about 400 contractual workers have also been waiting for the salary. Of total 364, more than 100 regular employees were forced to find other work like in Uber and Zomato. The employees, however, continue their work secretly fearing termination if their names appear in muster rolls.

Along with the staff of HNL, more than 4,000 workers were depending on the company. As the company is facing the closure, it would affect the lives of these workers and people who are living in the company premises as the local economy is built on the basis of the company.

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Further, the workers have more sorry stories to say. Recently, a senior manager who had come from the corporate office of Hindustan Paper Corporation Limited (HPCL) reportedly tried committing suicide. He who hails from Northeast, was not able to send money to home for the higher studies of his daughter. Since the neighbours found him in time, he was reportedly saved. Apart from this, two other workers have also tried committing suicide.

In March 2018, the company had invited expression of interests for the proposed strategic disinvestment of 100% shareholdings of HNL. And the disinvestment processes are progressing now.

Back in 1983, HNL was incorporated as a wholly owned subsidiary of the HPCL. HPCL was established on May 29, 1970 for developing indigenous capacity in production of paper and newsprint with a view to reduce dependence on imports. HPC launched the Kerala Newsprint Project (KNP) in 1976. The Kerala Newsprint mill rolled out the first newsprint reel on February 26, 1982 and went into commercial production with effect from November 1, 1982. HNL took over the business of KNP with effect from October 1, 1983.  

The Newsprint Company, one of the Miniratna Companies, produces newsprint of various types. It has been earning profits throughout till 2012. Once, the Company employed 1,200 persons, besides indirectly employing about 10,000 people. Later, because of modernisation, the Company reduced its employee strength to around 500. With a licence to produce 1,00,000 TPA newsprint and 20,000 TPA of writing and printing paper HNL had been achieving its full capacity use till recently, except for a few years.

Though the government says it is a liability to the Centre because of loses, the Company paid back, the pleadings stress as dividend more than what it had invested in the Company. But, from 2012-13, it has been incurring losses for various reasons. But by now, it has paid Rs.120.93 crore to its holding company as dividend. And during 2015-16, HNL paid Rs.730.32 lakh as taxes and duties to the government.

When the company was established in 650 acres of land, the then government of Kerala acquired land and handed it over for the company. Over the period of time, the Company developed a township, with the state government's coordination. As its raw material is pulp from the eucalyptus and the bamboo reed, the state government supplies it subsidised, for the Company generates employment and helps the State develop. It has subsidised water and power, too.

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Besides, in 1963, the Government of Kerala allotted the Forest Department's 5,600 hectares pulpwood plantation to the Company, for its captive plantation of raw material. But, now, only 3,035 hectares remain with it, the rest lost to encroachment and other allied causes. When the Company faced financial troubles, the state government exempted it for two years from the KGST Act, though the Government of India refused to extend the same benefit under the Income Tax Act.

Earlier in 2002, the Government of India tried to sell the Company to a private entity. But following the employees' agitation, it could not go ahead. Now, the Union government is determined to sell the Company, along with other public sector companies, as a part of its disinvestment. The unions, however, point out that the central government's measure will ruin Kerala's economy and it will also result in a large-scale reduction in employment.

In these circumstances, the Chief Minister of Kerala, on October 24, 2016, requested the Government of India to delink the Company from its holding company. He also requested the Union Government to make it an independent enterprise under the Department of Heavy Industries. So, it will have more operational freedom. But the Union government has so far not acted on the Hon'ble CM's representation.

Since there is no response from the Centre on the request made by the state government, Kerala Newsprint Employees Union had approached the Kerala High Court in 2018. In this petition, the court had sought explanation from the state Ministry of Industries. In the reply, Industries Department undersecretary had stated that the decision to hand over the land is illegal. If the Centre is giving off the company to private players, state can step back from the contract on land and it is mentioned in the agreement, the state had made its stand on this issue quite clear.

On the other hand, State Industries Minister EP Jayarajan, in June this year, informed the Kerala legislative Assembly that the state is willing to take over the HNL. Now, continuing its effort to take over the ailing CPSE, the state government is all set to approach the National Company Law Tribunal seeking for the same.

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