New Delhi: The implementation of the recommendations of the Majithia committee raising salaries for so-called working journalists (a term under the relevant Indian laws) and other newspaper employees has pushed Kasturi and Sons Ltd, the Chennai-based publisher of The Hindu and The Hindu Business Line, into the red. In a note to its employees dated 10 October, the company said it made a loss of Rs.65 crore in the financial year ending March.
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. This year, the loss at the company has already crossed Rs.50 crore, a person familiar with the matter said. Mint couldn’t independently verify this. 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. “We hold that the recommendations of the wage boards are valid in law, based on genuine and acceptable considerations and there is no valid ground for interference under Article 32 of the Constitution of India. Consequently, all the writ petitions are dismissed with no order as to costs,” the apex court said. The petitioners included Bennett, Coleman and Co. Ltd, ABP Pvt. Ltd (publisher of Anandabazar Patrika) and the Indian Newspaper Society, among others. A bench headed by chief justice P. Sathasivam held that “the wages as revised/determined shall be payable from 11.11.2011 when the government of India notified the recommendations of the Majithia wage boards. All the arrears up to March 2014 shall be paid to all eligible persons in four equal instalments within a period of one year from today and continue to pay the revised wages from April 2014 onwards”. 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.
On average, the wage bills of newspaper companies implementing the Majithia wage board have gone up by 20% to 100%. “Some employees will get as much as Rs.8 lakh in arrears which has to be paid in four instalments,” Ravi said. N. Ram and N. Murali, chairman and co-chairman respectively at Kasturi and Sons, did not respond to phone, calls, text messages or emails. A 13 October letter by the company to employees said the first instalment would be paid on 15 October “despite KSL’s financial situation being the worst in our history.” A copy of the letter was seen by Mint. A former senior employee of Kasturi and Sons said the company wasted the opportunity to move its employees from the wage board to the contract system on time. 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. The company, which publishes The Economic Times and The Times of India, competes with HT Media Ltd, publisher of Mint and Hindustan Times, in several markets.