Chennai: Employees of The Hindu and their families always use to dream about the big fat Diwali bonus the management use to dole out every year during the festive occasion. However, things are not going to be the same this year as the implementation of the recommendations of the Majithia committee raising salaries for working journalists and other newspaper employees has pushed Kasturi and Sons Ltd, the Chennai-based publisher of The Hindu and Business Line, into the financial crisis, due to the increase of the wage bills of newspaper companies implementing the Majithia wage board by 20% to 100%.
Almost 90% of the employees at Kasturi and Sons fall under the purview of the wage board, leading to the outflow of money towards arrears and higher salaries. The total outgo for Kasturi and Sons on account of the arrears payable to the employees since 2011 as well as the increase in salaries is expected to touch Rs.120 crore, according to The Hindu’s editor-in-chief and promoter N. Ravi.
“We may have seen marginal losses during years of economic downturn, but this is the first time that we have seen such a big loss,” added Ravi. Owing to its losses, the company has not been able to pay Diwali bonus to its employees this year; the bonus is a tradition at The Hindu.
In a notice to its employees, the management said: “Employees on the rolls of Kasturi & Sons Limited are outside the ceiling prescribed under the Payment of Bonus Act. Hence there is no statutory obligation on the company to pay bonus. Employees are also aware that the company is going through the worst financial performance, having suffered a loss of Rs.65 crore for the financial year ending 31 March 2014. Consequently, the company is not in a position to extend any benevolence in these challenging times.”
It, however, promised to pay Rs.3,500 as ex gratia one time sum to the employees. Kasturi and Sons used to pay a Diwali bonus of between Rs.40,000 and Rs.45,000 in recent years.
The non-declaration of bonus hasn’t gone down well with employees. Many are protesting the move by sporting black badges and some have threatened to go on a hunger strike on 17 October.
The company was under no statutory obligation to pay a bonus since all its employees earned upwards of Rs.10,000, Ravi explained. “What we used to give was a goodwill incentive. But now we are paying arrears at the same time,” he added, referring to the additional burden on employee costs imposed by the Majithia committee recommendations.
The recommendations of the Majithia Wage Board (headed by justice G.R. Majithia) were accepted by the government in 2011. The matter was challenged in court by a few newspaper organizations. In February this year, the Supreme Court dismissed the plea of newspaper managements seeking a review of its earlier judgement and directed them to implement the recommendations accepted by the Union government.
As per the recommendations of Majithia Wage Board “Some employees will get as much as Rs.8 lakh in arrears which has to be paid in four installments,” Ravi said.
The Company has swiftly moved many of its wage board employees to contract system, which was a delayed move., said an insider.
Ravi Dhariwal, chief executive (publishing) at Bennett, Coleman and Co., said there could be more to the losses at Kasturi and Sons. “Our outgo on account of Majithia would probably be higher than Hindu’s. What may be adding to Hindu’s problems could be the fact that we are progressing well in the South,” he said.
Bennett, Coleman and Co. publishes The Times of India from Chennai, which, according to Dhariwal, is eroding The Hindu’s market share and advertising revenue.