Stop the asset stripping of Modern Foods by Hindustan Lever Limited

Date: April 22, 2005

Shri Madhukar Gupta
The Vice Chairman, DDA
Vikas Sadan, INA,
New Delhi 110003

1. Ref: DDA File No F2 (8) 65/LSB (I), B4-8, Industrial Area, Lawrence Road, New Delhi 110035 (Plot Area 14,934 sq. yards)
2. Ref; DDA File No 20 (2) 77/ LSB (I), C-4, Industrial Area, Lawrence Road, New Delhi 110035 (Plot Area 9640 sq. yards)

SUBJECT: Illegal demand of Hindustan Lever Limited (HLL) (orignal name Unilever) to convert lease hold land granted to Modern Bakeries (India) Limited to free-hold with the aim of selling the lease hold land in violation of the orignal lease agreement between a government company and DDA, and in violation of the claim made by Shri Arun Shourie, former Minister of Disinvestment, that the land of Modern Food Industries (Inida) Limited was not for sale or for use other than for the purpose stated in the lease.

Sir,

We have come to know that the management of Modern Food Industries (India) Limited, (MFIL) which is now in the hands of the multinational Hindustan Lever Limited, has been pursuading your office to convert the leasehold land of B-4-8 Lawrence Road, and C-4 Lawrence Road, into freehold land for some time.

On 23-3-2004, an application was made by the Company Secretary of MFIL, Shri Atam Prakash, for conversion of the land at B-4-8 Lawrence Road. (Copy enclosed)
On 31-3-2004, another application was made by Shri Atam Prakash for conversion of land at C-4 Lawrence Road. (Copy enclosed)

On 26-3-2004, Shri J Vasudevan, Secretary in the Ministry of Food Processing Industries wrote to you asking you to assist the multinational HLL by giving it illegal possession of the land and then facilitating its quick conversion to freehold! The letter (a copy of which is enclosed for your quick reference) clearly indicates (a) the ministry wrote to DDA on 19-2-2001 requesting transfer of the plot C-4 to MFIL (b) Shri Vasudevan is concerned that the private owners of MFIL succesfully convert the leasehold to freehold with concession (c) Since the lease rights have not been transferred to MFIL (HLL) to date, he requests that you backdate this transfer in effect so that the multinational can quickly convert the land to freehold in violation of DDA norms as well as the agrreement of sale between the government and the company. It is interesting that the letter of Shri vasudevan to you precedes the application of leasehold to free hold.

We are sure that you will look into the matter very carefully and not take any hasty step, which will violate the DDA rules as well as the law of the land.

For this purpose, we would like to bring to your notice a few facts about the game plan of HLL.

1. Our Union and parliamentarians from different political parties had repeatedly questioned how MFIL, which had land worth over Rs. 2000 Crores in 21 units all over India, was sold to multinational HLL for a ridiculously low amount of Rs 105.45 crores on January 31, 2000. The Comptroller Auditor General (CAG) had also raised doubts on the sale. In response, former Minister of Disinvestment Shri Arun Shourie repeatedly clarified in parliament that the land value was notional, as it was lease land that could be used only for the purpose given, and was not for sale.
2. We would like to point out that the C-4 Unit land is for Fruit Juice Bottling and B-4-8 Delhi Bread Unit-I is for Manufacture of Bread and Bakery Products.
3. We would like to point out that the C-4 Lawrence Road Fruit Jucie Bottling Plant has been illegally closed from August 18, 2003. In connection with this, the Labour Commissioner/Labour Secretary Shri MK Mishra, declared the closure illegal on 23-9-2003. The case is pending in Labour Tribunal No Second, Karkardooma, New Delhi. (Copy enclosed)
4. On 29-June-2004, HLL sold 88239.7 Sq foot of the land of 30-A, in the MFIL bangalore Unit, on Tumkur Road, to one Messrs Bikaner House Limited for about Rs. 2.5 Crores. (Copy attached)
5. On February 22, 2005, and February 23, 2005, HLL has taken out advertisements in Hindustan Times and Navbharat Times for auctioning the land of Beverage Unit of MFIL, Sector 16-A, Mathura Road Faridabad adjoining Delhi Public School, Faridabad. The advertisement openly calls for auction of 1.27 acres as ‘residential’ and 3.64 acres as factory. (Copy enclosed)
6. HLL has closed down Delhi Bread Unit -II Kirti Nagar, New Delhi -110015 Fruit Jucie Bottling Plant (RASIKA), Lawrence Road, New Delhi -110035, Chandigarh, Jaipur, Indore, Ranchi, Kanpur, Bhagalpur, Silchar, Faridabad Roller Flour Mill, Beverage Unit, Faridabad, and others.
7. It is clear that HLL is interested in selling off the assets, movable and immovable, at a feverish pace and carrying out production in sweatshops to make maximum profits.
8. You may note that former Prime Minister Shri Atal Bihari Vajpayee had set up a Fact Finding Committee headed by Shri Hansubhai Dave and including members from the disinvestment ministry, the labour ministry, and the employers association to investigate the consequences of the sale of MFIL and BALCO to private parties. You may note that this Fact Finding Committee has conclusively indicted the HLL management for asset stripping and its report was submitted to the Prime Minister Shri Manmohan Singh on September 2004. It is expected to come up for discussion in parliament soon and a number of government officials are likely to be taken to task as well as the former disinvestment ministry for their questionable role.
9. We would also like to bring to your notice that there are a number of disputes pending between the MFIl/HLL management and the workers of Modern Foods Bread Unit-I which are pending in the labour courts, labour tribunals, labour offices as well as the High Court. There is a continuos dharna at the gate of Delhi Bread Unit-I since 28-April 2002.
10. We would also like to point out that in its application to BIFR submitted on 31-Jan-2005 (Case No 186/2001), the management of MFIL/HLL has openly admitted that it is closing down plants and reducing the workforce and carrying out various steps to turn MFIL profitable by December 2007. It is obvious that asset stripping and destruction of the company is the way HLL/MFIL management is going about this business. It is very likely that by Decemebr 2007, there will be no assets left in MFIL.They are making a pretense of running the company well, while it is extremely clear from their practice since January 31, 2000 that they want to destroy the company and eliminate the workforce (about 70% of the workforce have been retrenched since February 2000).
11. As an additional point we would like to point out that Shri Atam Prakash who was Company Secretary retired earlier this year. The MFIL/HLL management continues to use his name and signature for face value, which in our opinion is wrong.
12. Given these facts, the Modern Food Industries Employees Union appreciates your care in not giving in to the illegal demand of HLL/MFIL management to convert the land in C-4 Lawrence Road, and B-4-8 Lawrence Road, Delhi Bread Unit-I, from leasehold to freehold preparatory to its sale.

We would request you to intimate our union on the course of action that you take in this case.

With Sincere Regards

(Prakash Rao)
General Secretary

CC:
Honourable Shri Manmohan Singh, Prime Minister, Union of India
Honourable Shrimati Shiela Dikshit, Chief Minister, Delhi
Shri Sajjan Kumar, Member of Parliament, Delhi
Shri RK Azad, Deputy Director (Institutional Lands), DDA, INA Vikas Sadan, New Delhi 110003
Shri RK Singh, IAS, Commissioner (LD), DDA, Vikas Sadan, INA, New Delhi 110003
Shri NN Khanna, Secretary, Ministry of Urban Development and Poverty Alleviation, Nirman Bhavan, New Delhi
Shri J Vasudevan, Secretary, Ministry of Food Processing Industries, Panscheel Bhavan, New Delhi 110049
Shri Gulam Nabi Azad, Honourable Minister of Urban Development and Poverty Alleviation, Nirman Bhavan, New Delhi
Shri Subodh Kant Sahay, Honourable Minister of Food Processing Industries, Panscheel Bhavan, New Delhi – 110049
Central Vigilance Commission, INA, New Delhi 110003
We would appreciate if you take immediate action on this serious matter and also intimate our union on the action taken

(Prakash Rao)
General Secretary