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The Chief Operating Officer,

Falcon Tyres Limited,

Ruia Centre,
Dear Sir,

Through: Manager HR
Sub: Reply to the false allegations made against the Union/workmen
Ref: 1. your letter dt.30th Jan 2015.
2. your letter dt.10 th Feb 2015.

Received the above letter and surprised to note the contents. With reference to that letter, which
made many serious allegations on union/workmen such as the stoppage of SAP server, gherao,
hostage of senior executives and about your executives being not allowed to work on the
computer. Our clarifications include,

Regarding your allegation that you couldnt fulfill the requirements of SEBI due to the
stoppage of SAP server, it is completely a false allegation made on union/workmen as a
third quarter statement has been submitted and announced on 4 Feb 2014 which is after
the stoppage of SAP server according to your allegation. (Document attached with the
letter for your reference)
With reference to allegations 2A, 2B and 2C of your letter,
The allegations made in your letter is baseless and unfounded. The Management with
ulterior motive, made malicious charges on the Union / workmen, which we vehemently
oppose and reject the same.
The allegation 2D- As you know that, salary and dues have not been paid to the staff for
last 4 months. Hence the staff/management are leaving the company without receiving
any settlement. This reaction was purely due to restlessness of the staff and not the
Regarding other allegations, Falcon employees are committed for high degree of
discipline, law abided & peace loving people and your charges are not tenable with
pacifying of evidence.

By this, we can see, baseless allegations are made on the Union & its members and we can
foresee the bad intension of the Management and searching for reasons to put blame on Union
& its members, to cover-up their mistakes.
On the other hand, we would like to put the following facts for your information & request the
Top Management for serious introspection.
Our Falcon factory has a history of 39 years and even though, the Management has changed 3
times, factory was running smoothly and expanded its production level from 9000 tyres to 30000
tyres & 18000 tubes per day without major investment like building etc., Only extra machines
were installed with the available space and Union has given full co-operation, even though the
space for walking, trolley movement is very less.

In 2005, Ruia group took over the company. After some months, the Management planned to
start the co-generation plant and took loan from the banks. With no proper leadership, the
project was completed 2 years later than the scheduled time. After completion of the project,
the Management did not run the plant continuously, even though it is profitable and there is
constant demand for power. Hence it has become a dead investment and crores of rupees of
loan was burdened on Falcon Unit.
Later when Management planned to put PCR project. It has raised crores of rupees of loan
from various banks and again, project did not do well, just because of the failure from
Management Side. This loan burden also was put on Falcon Tyres.
When we started digging out for the reasons for existing problem, we realized that the valuable
money like working capital, loan borrowed from the banks has been utilized by the management
for other purposes which were not related to the company and with the failure of above 2
projects, the management, started consuming the Falcons base working capital. The
repercussions are:
Non-co-operation from Suppliers: Since the Management started accumulating the Creditor
amount by not paying them on time, the suppliers have stopped supplying the materials on time
and demanded for advance payment, as the Management has lost the credibility with them. In
fact, we have seen, many major suppliers of rubber have come with their family and pleaded for
payment else they have also told that, they will commit suicide, inside the factory as their
outstanding is too huge, which they cannot bear. At that time, it is Union, which has helped the
Management to send the suppliers out from the premises by convincing them. Is this a legal
thing from Management side? With this, production activity suffered a lot and nos. started
diminishing from 10,00,000 nos. tyres to 25000 no. tyres per month and from last 2 months,
there is no production activity at all.
Customers: With great demand for our products, O E customers & dealers have given crores
of rupees of advance and requested for supply of our products on time. The Management has
siphoned this money also and not fully supplied the required nos.
Bankers: After taking crores of rupees of advance from various banks, the Management
stopped transacting from the local lending banks and shifted all the transactions to Kolkata,
where corporate office is situated. With this, banks have sent notices and informed personally
by calling the Management to transact with them and to pay the interest on loan, which they
have extended to Management. The Management did not listen and stopped the total
transaction from these banks nor paid the installment / interest on loans taken from the banks.
Why lending banks are selling the liabilities to DRC? Why ICICI bankers are coming with
lawyers and when enquired, they are telling, due to non-payment, court ordered for
attachment? Is it not from the fault of Management side?
Due to nonpayment, transporters are also not co-operating with the
organization, and this has also resulted in delay, transporting the finished goods to customers.
Contractors: Company has not made the payment to contractors for the services rendered by
them eg. Security, Canteen, Housekeeping, Labour supply etc., with this, the contractors have
withdrawn their manpower and stopped servicing.
Security: For whole of the factory premises which is almost 20+ acres, there is only one guard
sitting in the gate. No. of times, thefts have taken place and this has been informed to
Corporate office by Local Management. 3 -4 times, our workmen have found and informed the

Security / Management about the theft tyres thrown out of the fence. Even police team have
also visited our company and informed to keep sufficient security vigil to avoid any thefts etc.,
Infact, many places, compound wall has fallen down and fencing has been cut, but
Management has not taken corrective action in this regard. During the non-production days,
our employees have made arrangements to close the fallen compound wall by fabricating &
using waste pallets.
Even though, security is a major issue in any organization, least
importance has been given in our organization, giving room for thefts and other on-toward
incidents. This clearly shows the negligent attitude of the Top Management towards Falcon
Occupational Health Centre & Ambulance Driver: As per the Factories Act, the organization
has to run the OHC with Qualified MBBS Doctor and male nurse in all the 3 shifts. But there is
no Doctor from last one year in our OHC. Due to non-payment, even the Ambulance driver is
not attending for work and 2 3 times, in emergency times, workmen have taken the deceased
in their own car. This also shows the mere negligence on the part of Management.
Canteen: From last few months, canteen service has been deteriorating day by day. The
contractor is not supplying the breakfast / lunch / dinner as per the terms of contract. When
enquired, he told, payments are not being made on time and he is finding it very difficult to run
the canteen. He is supplying only Rice & Sambar for lunch and still, our employees are cooperating with the Management and are consuming the said food from last few months. During
last week, even that service was hampered and the contractor has totally stopped the service
and after 2 3 days, with great difficulty, again the canteen service has been resumed. Is this
not a fault of Management?
Housekeeping: From last 10 12 days, there is no housekeeping service in the premises,
where 1000 + employees are working. All toilets are stinking and may lead to health hazard.
But Management is not taking any action towards this. Even after several requests, contractor
payment has not been made and hence he is not supplying the manpower for the said work.
Our employees have launched Swachchata Andolan and cleaned the entire premises
including wild gross cutting, reservoir cleaning, STP main. Etc., you have acknowledged
& appreciated this.
Payment of Wages & Other Statutory dues: With diminishing productivity, the management
even started accumulating the statutory dues like Excise, Sales tax, Income tax, PF, ESI etc.,

From October 2013 to till date, TDS has not been paid by the company even though the
same has been deducted from the concerned employee / contractor.

From February 2014, PF, ESI has not been remitted both Employee & Employer share,
even though, this is a Criminal offence as per the Act.

LIC premiums deducted from the wages of employees has not been remitted to the
Corporation. With this, employees policies were lapsed and if god forbids, something
happens, the deceased family will not get the insured amount, as the policy got lapsed.
The union is requesting for payment of atleast the LIC premiums without fail, but
Management is showing a deaf ear for our repeated requests.

Benevolent Fund & Co-operative Society Amount: The Amount deducted from the
employees wages towards Benevolent Fund and Co-op. Society has also been misused

by the Management and till date, the payment has not been received. With this,
Directors of the society are at risk, as they are answerable to the Audit dept. as per the
Co-operative society Act. Our repeated request to make this payment has not been
honored by the Management.

Housing & other Bank loans under Salary Deduction Scheme: The employees have
taken loans from banks and given an undertaking for Salary deduction payment.
Management has deducted the installment amount from the wages of the employees but
not remitted to the bank. In this context, bank is compelling the employees to make the
payment with penalized interest.

As per the wage agreement, the Management has not given Bonus, L T A, Uniform,
Shoes, Ayudhapooja gift etc., to the workmen and thus violated the settlement.

Our repeated appeal before you to resolve the above pending issues falls on deaf ear.
We would like to know the answer for above points and would like to have
explanation for the following:
With non-cooperation from the corporate Management, many well versed executives in the
rank of COO, VPs, GMs etc have left the organization. At one point of time, they have
explained the situation point by point and requested the corporate management to take
corrective action; else they will have no option but to submit mass resignation? The
management has accepted all their resignations and till today, their final account has also
not been settled.
When workers have showed their dissent on this and requested the corporate management
to retain these executives, Management did not listen to our request but released the
officers with immediate effect. The Union had long discussion on this issue with Corporate
HR executive. Corporate HR pacified us telling, they will bring more experienced officers
than the officers who have left and will run the company.
With great persuasion from Union, corporate HR arranged a meeting with the Chairman at
Bangalore on 31.05.2014. In the meeting Chairman assured that, things will comes to
normalcy within 3 4 months, and with immediate effect, they will start the production with
50% capacity i.e. 15000 tyres & 15000 tubes per day. Assured to pay the wages on time
and committed to clear all statutory dues within a span of 5 6 months. Why commitment
made by Top Most executive at the helm has not been honoured? Does Management
thinks that, it can continue to fool the workmen, who is suffering from hungry?
For the past 12 18 months, many CFOs, VPs were appointed but all are sitting in
Corporate office or they have left the service after serving for 2 -3 months, when they come
to know that, they do not have any authority nor the delegation to take any decision nor any
financial liberty to run the plant.
With all these, companys deterioration started and from last 4 months, Employees have not
been paid their legitimate earned wages and statutory dues are accumulating month after
month. No serious efforts are being made by Management to revive the company.

They have appointed one Executive Director and he came to Mysore for a day. When
Union requested for a meeting with the ED, he informed that, he will meet us the next day
morning and meeting was scheduled at 10.30 a.m. When we came for meeting, we were
surprised to hear that, ED has left for Bangalore. When we checked with our Guesthouse
keeper, we came to know that, he was very much in the Guesthouse itself till 12 noon but
avoided to meet us .Is this the way, a top executive handles the situation?
On the request of Top Management, Union has also approached the banks and other
financial institutions and requested to sanction further loans. Banks have also appreciated
the positive approach and informed us to come with the concerned executives and related
papers to move the loan application further. Union met the bank official again with top
officials of the company and banks have put only one condition that, company has to
transact through the lending bank only, which is genuine, as they have lost faith in the
top management, since after shifting transactions from Mysore to Kolkata, they are not
being able to monitor the financial transactions of the company and company is also not
producing the genuine accounts.
By using the goodwill earned by Falcon for last 39 years, Corporate Management took
hundreds of crores of rupees as loan from different banks, and managedby misusing the
funds and not repaying loans, FALCON has lost all its credibility with the financial
institutions, customers and suppliers, just within a span of 2 years. This is only because of
mismanagement of funds and poor leadership from Top Management. Will you atleast
accept this at this stage?
PRESENT SITUATION: The money raised through borrowings from the banks were much
higher side compared to the actual project value and the expenses made by the
management was with lack of vision & ulterior motive. Now to revive the plant, Working
capital is the only requirement and even at this stage, workmen are ready to cooperate with the Management if Management genuinely come with revival plan.
Simply, if you are coming with eye washing plans, we are not sitting here keeping
flower on our ears.
At any given point & with any number of hurdles, we will
definitely run the plant and we will not allow the Management to take any hasty
decisions, which the group is famous for. The so called turn around tycoon is only
making the running companies into sick units.
Union has written several letters from July 2012 to October 2014 to Corporate Management
and even to Chairman, explaining the situation and requesting for a meeting with him.
Further we have also informed the Chairman that, Union is ready to meet him at any
convenient date, time & place which suits him.
After several requests and persuasion, we got a reply from one of the Director, saying,
Chairman is busy till 15th March 2015 and unable to meet the Union leaders. When none of
the group units are not running to its full capacity, it is the primary responsibility of the
Chairman to take every body in to confidence, including Union / workmen, for revival of the

With no other options left, we have approached the Government Authorities and met the
Honourable Chief Minister of the state to help the unit for its survival, as it has employed
1200+ employees directly and several hundreds more indirectly and mettings were held with
the Addnl. Labour Commissioner, at Bangalore and some of the collective measures were
taken in order to solve the problem.
The company is having potential of 1200cr turnover and having a profit margin of 6 to 8%
per annum and even today, the establishment is highly prosperous and profitable.
In one sentence we can say by taking everybody concerned into confidence, the

revival of the company is not a big problem.

Even now, Union is ready to join hands with Management to revive the company and to bring
Falcon to its old glory. Union & its member will support and extend helping hand in any
manner, if management puts its efforts sincerely towards revival.
Hope, the Management will come out with a positive revival plant with genuine interest
immediately to avoid any further damage in the days to come.
Thanking you and anticipating a favorable action from Corporate Management.

Yours faithfully,

Encl: 3rd quarter statement of accounts of FTL.

Cc: 1. Additional labour commissioner, Government of Karnataka.

2. Deputy labour commissioner, Government of Karnataka.
3. Sri Pawan Kumar Ruia, Chairman, Falcon Tyres Ltd.,
4. Sri S Ravi Advisor of the company FTL
5. Smt Sujata Raju, Head HR , Corporate Office, Kolkata