The decision of the company to pay a bonus of 8.33 per cent and ex-gratia of 3.67 per cent came soon after break down of negotiations with union leaders which was being mediated by the Joint Labour Commissioner. The declaration, according to sources, is being widely welcomed by the 4,000-odd strong workforce of LMC's four units.

According to industry sources, LMC's decision on Tuesday would instil confidence in other textile spinning mills too to settle for a lower ex-gratia payment. ``Most mills would follow suit in the next two days. The union leaders' hardline stand has not been accepted by the workers,'' the industry source said reacting to LMC's decision.

Southern India Mills' Association (Sima), it may be noted, had been holding negotiations with the Joint Action Council (JAC) of eight textile trade unions for a `bonus package' for workers of textile mills in the Coimbatore and Erode regions. Sima contended that bonus, to be paid before Diwali, should be less than that of last year. This was not acceptable to the unions who sought a higher bonus for all the three categories -- cash loss making mills, minimum bonus and maximum bonus.

The breakdown of talks between the mills' representative body and the unions forced the latter to hold negotiations with mills at unit level. Meanwhile, at least two other loss making mills have declared a bonus of 8.33 per cent. Yet another unit, RRR Spinners, has decided to give 13 per cent (14.50 per cent) as bonus/ex-gratia to it's workers.

The current developments in the spinning industry is being keenly watched since those units which succeed in signing a ``lower bonus'' accord or successfully declaring one such without antagonising their workers could gather confidence while negotiating wage settlement which is already due.