Cabinet decides to pay off JCF staff

THE Cabinet on Thursday decided to pay off all the employees of Janakpur Cigarette Factory (JCF) which has remained closed for the last two years. There are a total of 758 staffers at the factory. The laying off of the staffers will cost more than Rs 2 billion in salaries, gratuity and other facilities as per factory’s employee bylaws, according to the Ministry of Industry. The Cabinet also dissolved the factory’s board of directors and formed a committee headed by the joint secretary at the Industry Ministry to recommend measures to be taken to manage machineries and property of the factory. “The committee will recommend on whether to hand over the factory to the private or any other option,” said Krishna Gyawali, secretary at the Industry Ministry. “The government is most unlikely to run the factory.” After holding a study, the Public Enterprises Board (PEB) had suggested the factory staffers be paid off and the factory be handed over to the private sector. Over what they are entitled in a year, the factory employees will be provided gratuity of extra one month, according to Gyawali. The staffers have also been demanding extra gratuity saying that they are retiring prematurely. The government will provide them salaries and facilities in two installments. “Salary and a few other facilities will be provided in the current fiscal year,” said Gyawali. “Additional facilities will be given in early next fiscal year.” He said necessary resources to pay off the factory staffers will be generated from the government fund meant for public enterprises and other sources. Although the staffers have been idle since the factory closed in March 2011, the government has been paying their salaries. “The government has been incurring a loss of Rs 850,000 per day in employees’ salary alone,” said Gyawali. The factory also has other liabilities. It owes Rs 500 million in loans to banks and Rs 120 million in taxes to the government. The factory also owes hefty sums to its raw materials suppliers. A study of the Public Enterprise Board (PEB) in 2012 showed that it owes Rs 70 million to tobacco suppliers in India. It also has to pay Rs 210 million to Rastriya Beema Sansthan in insurance premiums, according to the PEB report. The board study has valued its fixed assets at Rs 10 billion, but it dœs not have cash currently. Built in 1965 in financial assistance of the then Soviet Union, JCF was the market champion during its heyday. It manufactured a slew of brands, each of which had a dedicated fan following. The company went into a tailspin a decade ago as mismanagement, overstaffing and quality loss of its products took its toll. Even the selling of its property at New Baneshwor at a hefty price could no save it, leading to ultimate fate of paying off entire staff.