The request was initially placed at the Ministry of Industry, which was later forwarded to the Ministry of Finance for approval. The finance ministry acknowledged receipt of the letter but said it has not made any decision in this regard.[break]
Although the reason behind the move made by the employees, who earlier used to pester the government to keep the factory running, is not known, acceptance of the proposal is expected to benefit the government, which is currently forking out around Rs 12 million every month to pay the staff of the factory which has remained closed for two years now.
Yet it has not been able to take a decision in this regard due to “lack of funds”.
“We´d need at least Rs 1.27 billion to introduce the severance package for 789 employees at the factory,” a high-ranking finance ministry official told Republica. The amount includes gratuity of employees, which is extended as per the company´s rule, coupled with insurance, medical and leave benefits.
“If we factor in their request to extend around one month´s salary in the gratuity, we might even end up paying around Rs 2 billion,” the official said. “But since the country didn´t get a full budget this year and has to follow the pattern of last fiscal year while spending money, it is difficult to allocate funds for an entirely new purpose.”
Established in Jan 1965 through the support of the Russian government, the factory once used to make famous brands of cigarettes like Yak, Gaida and Deurali. But after its near-monopoly in the tobacco market ended following entry of Surya Tobacco, it started losing its market share. And by the year 2010/11, the company had accumulated a cumulative loss of Rs 170.80 million.
The company has cited use of obsolete machines that led to its failure in a report launched by the government in mid-July. But in addition to that unnecessary political intervention in operation of the factory, unnecessary interference in appointment of the factory´s chief and overstaffing have also led to the failure of the company.
Ultimately the company was closed down around two years ago after it could not even generate adequate revenue to purchase raw material.
Earlier in February, top officials of the factory had met with Finance Minister Barsha Man Pun and demanded a sum of Rs 606.4 million to bring the closed state-owned enterprise into operation. The officials had also said the company would need a cash injection of Rs 1.99 billion in the long-run to run the factory.
Then in June, the company, via the Ministry of Industry, sought Rs 2.24 billion from the government to revive financially-troubled factory.
The business plan presented at that time said the factory would require a sum of Rs 1.24 billion to cut down 550 jobs in the factory, which is currently employing around 1,000 people, and another Rs 265 million was needed to clear off dues of retired staff.
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