Mob-hit Regency Ceramics says revival uncertain

Regency Ceramics, floor tiles major, whose unit in Yanam, Puducherry, was turned into ashes by workers, is now facing uncertainty over the revival of the company.

While the loss is estimated to be at Rs150-200 crore, it is still not known if the Rs450-crore insurance cover the company has for the factory bails it out.

“I am not sure if we can revive the operations. We are still undecided. We are assessing the loss and the top management has still not visited the factory since the burning down of the unit,” GN Naidu, Regency’s chairman and managing director, said.

Though there was no formal union activity in Regency in its three decades of existence, the setting up of a union a year back is believed to have spoiled the bonhomie between the workers and the management.

The continued friction between the management and the union resulted in a non-agreement on several issues including reinstatement of some of the ousted workers and paying out of interim increments.

“We had agreed to pay a bonus of Rs5,000 to all the employees though the union demanded Rs6,000. However, the Rs5,000 proposal was approved by the union as well. Though we had paid an increment for 2011-12, the union was insisting on interim increment for the current year. That was not acceptable to us since the company is facing tough times in terms of profitability,” he said. The Yanam facility is Regency’s sole unit.

With the employee-management negotiations hitting a dead-end, the management was trying to ensure continuity in production by seeking police protection. Agitated by this, on January 27, the workers resorted to violence by torching the factory, warehouse and the vehicles owned by the company. In this free-for-all situation, a mob attacked the residence of K C Chandrasekhar, the company’s president (operations), and hit him with sticks and rods. Chandrasekhar, also Naidu’s niece’s husband, succumbed to injuries at a hospital in Kakinada in Andhra Pradesh after battling for life for about three hours.

“The mob looted everything from the factory including cows and buffalos from the Goshala (cowshed). We had invested about Rs1.5 crore on the cowshed and the cattle. Tile inventory worth Rs20 crore was either looted or burnt down,” he said.

Regency had revenues of Rs200 crore for the last fiscal and has been running in losses due to lower capacity utilisation.

“The gas supply from ONGC was inadequate and we were not able to operate at full capacity. Currently, we have an accumulated loss of about Rs35 crore and a debt of about Rs80 crore. We were pinning hopes on the fourth quarter to break even and start booking profits. Now, the situation is back to square one,” Satyendra Prasad Narala, Regency’s executive director, said.

According to him, with the availability of gas improving, the company was moving towards value-added products, including vitrified tiles, duro and large-format wall tiles. “Next financial year, we would have turned around,” he said.

Regency is a leading player in floor tiles market and is said to be one of the top three exporters of tiles from the country. Though a ceramic tiles major, the company currently gets about 60% of its revenue from vitrified tiles.