Mumbai, Aug 20: Morarjee Goculdas Spinning & Weaving Co, a Piramal group company, has trimmed its workforce by 10 per cent during 1996-97. The move is in line with the recommendations of international consultants, McKinsey & Co.

The consultants, in their restructuring report last year, had suggested that a substantial reduction in employees was essential for modernisation.

In a 5000-strong workforce, around 500 employees have opted for the voluntary retirement scheme, company sources said. They have been given an additional 36 months salary as part of the compensation. The majority of the workers going for VRS belong to the lower cadres. The scheme has been implemented after an agreement with trade unions, the sources said.

As part of its modernisation drive, Morarjee is planning another 10 per cent reduction in workforce this financial year, the sources said.

The company plans to invest Rs 25 crore for modernisation, a major part of which will be channelled into its joint venture with Manifattura Castiglioni of Italy for manufacturing home furnishings.

As part of the agreement, the processing and printing facilities of Morarjee will be upgraded. The update plan is expected to reduce value loss by cutting down the production-cycle. It will also result in high-value addition. The upgraded processing house will be commissioned in February 1998, according to the sources.

Modernisation has become a necessity with the powerlooms posing a major threat to the operations and the rising demand for quality, sources said.

The funding of modernisation plans remains a problem with the government yet to take a decision on the sale of surplus land despite a scheme prepared by the Industrial Development Bank of India.

If the government allows the sale of surplus land, the company can go in for a more broad-based modernisation, the sources claimed.

The company, sources say, is planning to raise funds in the current financial year to meet its working capital expenditure and the improvement in productivity achieved through workforce reduction is expected to help by making access to funds easier.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.