POWER AND POLITICS : A REVEALING CASE STUDY

BY

Dr. T.Thomas, Dean (Academics)

Continental Chemicals Ltd.was floated by Mr. Mohanlal Choonilal in early Year No.
1(Y1) to break the monopoly of Petrochemicals (India) Ltd" a British subsidiary,
established 10 years back. Mohanlal, graduate in arts, in his late 40's, was the
erstwhile Marketing Manager of Petrochemicals (India) Ltd., when he embarked
upon the idea of floating a new company by himself. The Company acquired land in
Thambiland, about 30 Kms. away from an Indian metropolitan city. This location
was ideally suited for the manufacture of various petrochemicals, especially from
the point of view of being away from the city population in order to avoid health
hazards. In addition, the necessary Infrastructure facilities, development rebate etc.,
were also available there.

The Company's initial business was limited to trading in petrochemicals, imported

from European countries. Owing to the heavy demand and the highly inadequate,
supply position within the country for these chemicals, there was no marketing
problem whatsoever. The Company entered into collaboration with its principals for
training its personnel in the engineering and production shops. Accordingly, a team
of experts were sent abroad in Y2 who received training in various aspects of the
business. On return, plant and machinery were erected in Thambiland and
production commenced with knowhow from the collaborators.

Due to favourable and protected market, the Company's progress was phenomenal.
The sales turnover grew from Rs. 60 lakhs in Y2 to Rs. 2,000 lakhs in Y15. The profit
before tax increased from Rs. 41akhs to Rs. 400 lakhs; Total assets from 70 to 1,800
lakhs, and net worth from Rs. 30 lakhs to Rs. 950 lakhs (See Table I). In addition, the
Company ventured into diversification in Y10, by acquiring a Paint Industry.

TABLE I

Continental Chemicals Limited Extract from Balance Sheet and Profit and
Loss Account
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Item Description Year (Rs. Lakhs)

Y1 Y5 Y10 Y15

Sales 60 150 500 2000

Profit before tax 04 015 100 400

Total Assets 70 150 650 1800

Net worth 30 060 420 950

The Company has a Product Development Department which is responsible for

improving existing products as well as for the deve1opment of new products. It was
started in Y1, with a skeleton staff of one Chief Scientist, one Senior Scientist, two
Scientists and five Technicians. The Chief Scientist was responsible for general
administration of the department /section whereas senior scientists and scientists
were mainly technical staff actually engaged in' Product Development. The strength
of the staff was progressively increased in keeping with need to cope with the
complex needs of a growing Industry (See Table II).

TABLE II

Continental Chemicals Limited

Staff Position in Product Development Department

Category Year

Y1 Y5 Y10 Y15

Chief Scientist 1 1 2 3

Senior Scientist 1 2 6 12

Scientist 2 4 7 15

Technician 5 6 15 18

Total 9 13 30 48

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One of the proud achievements of the Product Development Department was the
versatile antiknock agent "ANK-201", on which Indian and Foreign patents were
pending. A German firm, Verbrennung GmbH, had placed order worth Rs. 10 crores
on Continental Chemicals Ltd.for this product,with the date of delivery, latest by
December, Y15 . The Company was confident of meeting this schedule, positively
by August, Y15.

Being a Process Industry, intensive laboratory and pilot plant studies, had to be
carried out prior to the introduction' of any new product in the plant. The laboratory
and pilot plant were scattered over a wide area, mostly owing to safety
considerations and process requirements. The technicians offered skilled assistance
in operating the 'Plants, material handling, running errands, etc. Chief Scientists
were post-graduates with more than 20 years experience in process industries. The
Senior Scientists and Scientists were mostly post graduates, with the exception of a
few. The technicians were' post-matrics, but undergraduates.

The Product Development Department turned out excellent work in its specialized
areas and has been responsible for the introduction and commercialization of many
outstanding products. The original collaboration agreement of Y1 was for a period of
5 years, subject to further extension, if found necessary. By Y5, the Company had
developed its own, superior indigenous technology, thus eliminating the need for
continuation of the collaboration. Mohanlal took great pride in the achievements of
the Product Development Department. The Board of Directors approved the
sanction of 5% of the annual sales turnover for Product Development Department.

The year Y10 witnessed the sudden promotion of 4 graduates to Senior Scientist
level. The criteria was not merit or output, but the fact that they belonged to the
same community as Choonilal Mohanlal. Such instances were not isolated to Product
Development Department alone.

Mohanlal was a staunch believer in the Hare Krishna cult. In Y12, he attended an All
India Conference of the movement in Varanasi. There he met Mr. Bansilal, the active
Organizing Secretary. Mohanlal was very much impressed by the keenness with
which Bansilal was taking part in the celebrations. They became thick friends. On
inquiring about the background of Bansilal, it was learnt that he is an Academician,
with, fairly good theoretical background. Suddenly an idea flashed in Mohanlal's
mind. "Why don't I, recruit this young man for my Product Development
Department? - I shall have a good blend of theory and practice!” Bansilal readily
agreed to his appointment as Senior Scientist.

A red-carpet welcome was offered to Bansilal in the Company by Mohanlal. "The

latter, took him round in the Product Development Department, hand in hand, and
introduced him to the Chief Scientists and Senior Scientists. The Scientists were "too
junior" for Mohanlal to talk to. But the fact remained that these were the most

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competent people in the department, who were mainly responsible for the
introduction of new products, with the assistance of the supporting technicians.

Being a pure theoretician, many of the ideas of Bansilal were too much
sophisticated and not applicable in the industrial field. Some of the ideas were
laughed at by his colleagues. Certain experiments planned and executed by Bansilal
tumed out to be mere waste of precious resources. The processes, of course, were
technically feasible, but not commercially viable.

The Product Development Department comprised of different 'Project Groups'

consisting of a 'Project leader' who will be either a Sr. Scientist or a Scientist. Other
members of the team are scientists and technicians. One of the scientists-Mr.
Ramanath- was held in high esteem by all technicians from all groups. He was
deemed as their friend, philosopher and guide. The reason for the same was that he
used to encourage their development and took personal interest in their progress.
He also encouraged them to take up evening courses in order to ensure professional
advancement. About ten technicians took advantage of this opportunity and passed
higher grade technical examination. They had built up aspirations for promotion to
the level of Scientists in course of time.

Ramnath had 4 technicians working directly under him. Bansilal was allotted two
technicians. He requested Ramnath to spare him two of his assistants. This request
was not conceded to since the same was not warranted as per workload
requirements. This incidence sparked off flame in BansiIal's mind. "Who is this
janitor to dictate terms to -me? In fact I am the Sr. Scientist over here. I will teach
him a lesson!"

BansiIal established a local unit of Hare Krishna Movement with Mohanlal as the
President, in Thambiland. On all Sundays they used to meet there and spend
considerable time in Bhajans and Discourses. Bansilal was successful in enrolling
more than 100 devotees in this locality.

One day, in August, Y14, after the Bhajan was over, the following conversation took
place between Bansilal and MohanJal :-

Bansilal : "I have been wanting to tell you something for quite sometime"

Mohanlal:- "What is it?"

Bansilal : "Suppose there is unproductive labour in our factory, what would you do
with them ?"

Mohanlal: "Unproductive labour? In my factory?. I will sack all those guys!! Tell me
what has happened."

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Bansilal : " Those technicians in the Product Development Department – they do
nothing. They simply while away their time. You call see this for yourself if you
come tomorrow morning at 7.00 a.m."

Mohanlal: "0. K., Very good. I'll come without fail."

As already mentioned, Thambiland was 30 Kms. away from the city. The working
hours were 7.00 a.m. to 4.00 p.m., with a lunch break of one hour. The Company
used to ply buses for picking up employees from different parts of the city. The
buses used to leave the city by around 6.00 a.m., necessitating the employees to
wake up latest by 5.00 a. m.

Not having used to taking break-fast at such an early hour, most of the employees
used to bring it to the factory and consume the same immediately after reaching
their respective departments. Product Development Department was also no
exception to the above practice. Everybody including the Chief Scientist was aware of
it. However, they didn't give undue importance to this trivial issue since they had
more important things to take care of. It was the last working day of August, Y14.
Sharp at 7.10 a.m. Mohanlal stepped into the Product Development Department.
The technicians were having their breakfast as usual. Everybody was surprised to
see the Managing Director at such an odd hour since he used to come to the factory
only around 10.30 a.m. on all days. "What are you doing? This is not lunch time"-
shouted Mohanlal. Everyone was speechless. Without waiting for an answer, he left
the department, hitting the air with his fists.

The same evening, around 4. 00 p. m., he came to the department again. The
workplace was being cleaned up after the end of the day's work. The first person to
fall into MohanJal's red eyes was Chandrasekhar, a young technician.

"What are you doing?”--exploded Mohanlal.

"Cleaning Sir!”-gently replied Chandrasekhar.

"What cleaning?"

"Laboratory cleaning!"

Without telling a word, MohanIal went to the second floor to meet Bansilal. The
latter was busy with the latest edition of "Blitz”.

“Good evening BansilaI! "-MohanlaI greeted.

"Good evening, Sir!”-reciprocated Bansilal. "This weekly gives a good account of

nudity in films"--wading through the pages he continued. Mohanlal had a cursory
glance of the printed matter and remarked, "Good".

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"Well," Mohanlal said, "Today I found out the truth by myself". "You are talking in
parables. Please tell me what has happened".

"The other day only you told me about the unproductive labour. Today I came
around 7'00 a.m. and saw all of them wasting their time in eating and drinking. I
again came just sometime back and saw them doing nothing! Seeing me one chap
started cleaning up the table. When I asked him what he was doing he had the
audacity to tell me that he was doing laboratory cleaning. These are mere parasites.
I will sack all of them; I'll SACK THEM!!

“When is the next Hare Krishna Bhajan ?"- inquired Mohanlal.

"Next Thursday Sir."

‘'Very Good; See you then"- Mohanlal left the place and went to his office.

In January, Y15, Mohanlal went on a business tour of Japan and Australia. There he
saw fully automatic machines operated by remote control techniques. A single
operator could manipulate an array of plants. “MohanlaI thought, "Since one
operator is managing such sophisticated control systems, why not my scientists also
work with their own hands. Nothing will happen, if I sack all the technicians."

But the fact Mohanlal failed to realize was that the manual labour involved in
operating Electronic Control Systems is very minimal, whereas, that in the Product
Development Department, especially with widely scattered Sections was enormous.
He returned from abroad during March, Y15.

Bansilal met Pannalal, a local M.L.A. in the Bhajan Samaj, during February, Y15.
Pannalal was mentioning to Bansilal that his Son was employed in Hindustan
Petrochemicals Ltd., in the Materials Handling Department. He also added that the
work was rather difficult since he had to handle heavy loads of raw materials.
Bansilal said, "Cheer up man, Cheer up!! I shall solve your problem. You simply
telephone to our Managing Director requesting him to transfer your son to the
Product Development Department. There is absolutely no work there" Pannalal was
very happy. . "You are my Lord; my Saviour"- He prostrated at the feet of BansiIal.

It was April, Y15. Mohanlal was consolidating his ideas based on his tour. At 11.00
A.M. the telephone rang. It was Pannalal.

Pannalal: "Good Morning, Sir; Pannalal speaking."

Mohanlal : "Panna!al? Which Pannalal? I don’t recollect who you are. "

Pannalal : "I am sorry that you have forgotten me. I am the local M.L.A. and also a
member of the Hare Krishna Movement.

Mohanlal : "Yes, yes. I remember. What can I do for you?”

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Pannalal “S}r, would you mind doing a small favour for me ?"

"My son Heeralal is in the Materials Handling Department. He is heavily

overworked. The poor chap falls sick quite often. Why don't you kindly
transfer him to the Product Development Department, where there is hardly
any work?”

A shiver passed down Mohanlal’s spine. His eyes were red and forehead filled with
sweat. Containing himself he said, "I will look into it." He banged the telephone with
such violence that its ear-piece fell off the receiver. Calling his Secretary he
shouted, "Throw out that telephone."

By this time Mohanlal had reached his limits. He was bent upon sacking the
technicians at any cost. He rushed to the Personnel Manager and exclaimed, "Sack
the technicians in the Product Development Department.” "What?, the Personnel
Manager was surprised.

"What happened?" How can we sack them when: there is no prima facie case
against them?"

"Don't teach me Vedantham. You do what I say. If you cannot sack them, I'll do it
myself"- thus saying, Mohanlal returned to his office.

He ordered his Secretary to type out a letter, transferring all the 18 technicians to
the Packing Shop and signed the letter himself. The notice was displayed on the
notice board of the Product Development Department.

Nobody saw the notice till the next day morning. When the technicians saw it, there
was a big commotion. Every one in the Department was taken aback by this most
unexpected and unprecedented notification. The technicians met the Chief
Scientists only to learn even they have not been kept informed about the transfer.
The Scientists and Sr. Scientists also were puzzled at this development.

The Chief Scientists contacted Mohanlal to enquire about the transfer. The only
reply they could get was that it is HIS DECISION, and that it is FINAL AND BINDING.
The Chief Scientists informed the technicians about their inability to convince the
Managing Director against the transfer.

The technicians prayed to the M .D. to grant them the privilege of a meeting with
him. Mohanlal's Secretary told them that the former is too busy to grant an
interview. They returned in disgust. A similar request, jointly made by the Scientists
and Sr. Scientists also met with the same fate.

A few technicians left for the new section. But the majority of them surrounded the
Chief Scientists' office. They told that they were ready to go, but wanted to know as

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to why they were suddenly being expelled and being forced to do unskilled job.
Owing to the good rapport between the Chief Scientists and the technicians, the
former could somehow make the latter agree to going to the new department, with
the assurance that some reasonable solution would be arrived at ,in, a couple of
weeks.

The sudden ad hoc decision to transfer the technicians to the, Packing Shop had far
reaching effects. The Trade Union office bearers stormed into the Personnel
Department and wanted the Personnel Manager to explain as to why the Union was,
not kept involved in taking, the important decision on transfer. They also warned
him that the matter would be taken up with the Labour Commissioner and other
Governmental authorities.

By August, Y15, the efficiency, of Product Development 'Department, came down to

a great extent Much of the Scientists' and Sr. Scientists' time was being consumed
by routine and mediocre activities like shifting materials, washing and cleaning up
plant and equipments etc. There was hardly any time for them for activities like
Planning, Organizing, Co-coordinating and Controlling the various Product
Development functions as they were doing in the earlier days. Consequently, many
key projects were moving at snail's pace, much behind schedules.

December, Y15, saw the resignations of 10 Scientists and, 5 Sr. Scientists from
Continental Chemicals Ltd.The, only Sr. Scientists who remained were the four
promoted during" Y10, Bansilal and, another two. 90% of the post-graduates,
including" Ramnath left the Organization.

June Y16, came as a shock to Mohanal. He received a letter from B. J. Henninger,

President of Verbrennung GmbH, cancelling the order for the Rs. 10 Crores worth of
“ ANK-201 " . The letter mentioned that the delivery was pending for more than 6
months and that they can no longer, take any risk of non-receipt of this vital raw
material. It was also made clear that they had already located sources for this
product elsewhere in the World Market. The price is slightly higher. ,"But we do not
want to be Penny wise and Pound foolish", the letter said.

Mohanlal was feeling giddy. He was telling to himself: "I have, always had courage
of convictions. I have always stuck to my decisions and have been successful. I
never thought that a situation like this would develop. Where did I go wrong?!”

Contact: The author can be contacted at srprofessortt@yahoo.co.uk for a copy of

the article.

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