Workers strike at Bajaj plant: Union demands 500 equity shares at Rs 1 apiece for each worker

A strike at Bajaj Auto's Chakan plant in Pune, on since Tuesday, wouldn't have registered much of a blip in the auto industry had it not been for an audacious demand from union leader Dilip Pawar. Vishwa Kalyan Kamgar Sanghatana, the union Pawar belongs to, is demanding that the company allot 500 shares each to all workers at a price of 1 per share.

At the current price of Rs 1,788 per share, the union is demanding that stock worth Rs 83 crore be issued to about 925 workers for a total consideration of Rs 4.6 lakh. Put another way, the union is demanding every worker be given stock worth Rs 8.94 lakh for a price of just Rs 500. Pawar's demands didn't perturb the stock market - shares of Bajaj AutoBSE 3.20 % declined by just 0.6% a day after the company informed the BSE.

But the auto industry, which has seen some ugly face-offs with workers including one in July 2012 in which striking Maruti SuzukiBSE -0.74 % workers turned violent, resulting in the death of a general manager, is anxious and perplexed.

"I don't think it (share for employees) is a normal practice...I have not heard of such an issue elsewhere," said Baba Kalyani, CMD at Pune-based Bharat Forge.

"It's an absurd demand made by one person. Pawar is a leader without a follower," thunders Rajiv Bajaj, Managing Director, Bajaj Auto. "Pawar and his coterie of thugs are desperate to establish a power base after becoming outcasts when rejected at Akurdi, Pantngar, and Aurangabad."

Pawar has a long history of confrontations with Bajaj. The latter alleges that Pawar tried to trigger trouble in several Bajaj Auto plants like Pantnagar last year, in Aurangabad and now at Chakan. Pawar claims the company spiked attempts to start unions in some of these plants.

Bajaj also alleges that Pawar and his men are resorting to coercion and violence, including kidnapping and misbehaving with women, and added that the police are taking action. "I hope they will ensure that this doesn't get out of hand at Chakan as it has in recent times at some other auto plants." His last sentence underlines the industry's fears over another worker flare-up. Pawar claims that the company is filing police complaints to put pressure on workers. The worker protests, he asserts, is entirely peaceful.

"The workers weren't given a hike this year, so we said if not a salary increase, give us shares," says Pawar. But he goes on to add that the issue of shares is not his main demand even though Bajaj Auto, in its notice to the BSE, said it was the sole reason for the strike.

"This isn't a big issue and we haven't really discussed it with the management yet. We had to have technical grounds for the strike because some of the other matters are sub judice...we couldn't raise those," says a brazen Pawar. The Union's other demands include 25% wage hike, permanent employment for contractual workers, reinstatement of some suspended employees and bringing back some Chakan plant workers who were transferred elsewhere.

Bajaj hopes to make 50,000 motorbikes in June and July each at its Chakan plant compared with the usual 75,000 a month, a television channel quoting Rajiv Bajaj said. Bajaj makes two-wheelers, including its flagship Pulsar and high-end sports bikes, at the plant, which has an annual capacity of 1.2 million vehicles. "I am not unduly concerned. Around 100-200 workers have already rejoined work and production has recommenced today," Bajaj told ET. "Dealer and company inventory is around 4-6 weeks, so the strike will not impact sales immediately," says Umesh Karne, analyst, Brics Securities. "If production is stopped for more than 4-5 days, then sales are likely to be affected." Bajaj Auto decided against ESOPs, even in the days when IT companies were doling out options for senior management, as it felt that ESOPs were given by companies which didn't have cash. "Isn't it absurd that workers should demand equity shares when even the senior management doesn't have any," Bajaj quips.

In any case, it is not legal to give shares to any worker virtually free and without the consent of the shareholders, he adds. A May 2013 survey released by ESOP Direct that covered 117 companies in India shows that more than half of companies that offer ESOPS cover less than 10% of employees in their schemes, and about 67% of stock options are given to senior management, with the CXO-level executives accounting for 24% of the pool.

Top industry officials are watching the situation closely. They are now anxious about any reports of worker unrest. Maruti Suzuki Chairman RC Bhargava, for example, responds cautiously. "Workers need a sense of ownership," he concedes. "So, through a trust, workers should be allowed to buy and sell shares of the company, but not allowed to sell the shares in the market."