Arshiya International, the Mumbai-based logistics major, has sacked several top-level employees since Saturday on shrinking orderbook caused by a long slowdown in the infrastructure sector.
DNA Money spoke to several of the axed staff, who have alleged financial irregularities at the company.
“The company has paid dividend to shareholders but not salaries to staff since September,” claimed one of them, requesting he be not named.
This person said as many as 290 people were asked to leave sans termination letter, notice and dues, adding: “The axe would fall on many more in the days to come.”
Ajay Mittal, group chairman and managing director, called it “complete misguiding of media” and said only the non-performers were shown the door.
“I have sacked a total 20 people out of which 13 are from the FTWZ. They were hooligans, trouble-makers and non-performers,” said Mittal, who refused to reply by email, saying he is in hospital attending to an ailing uncle.
FTWZ is short for Free Trade Warehousing Zone. Arshiya was the first to set it up in India, at Sai Village, Panvel, in the Raigad district of Maharashtra.
Mittal said the sacked staff visited the company’s office in Panvel on Tuesday and threatened the regular employees to stop working or face dire consequences.
“We called the police and dispersed them after they turned aggressive and started demanding six months of salary and recommendation letters,” Mittal said.
Another senior employee from the finance department, again on the condition of anonymity, made a rather serious charge: “The promoters have misguided investors, stakeholders, banks and the company’s shareholders by painting a rosy picture so far. Inside the books, the company is hollow – it is a mini Satyam,” referring to the Satyam Computer Services scam.
Between fiscal 2007 and 2012, Arshiya’s net sales grew by 467% and net profit by 590%. The share price hit a high of 403.85 on January 9, 2008, but fell 89% to Rs 45.80 on March 16, 2009.
Then it rose 665% to Rs 350.20 on October 12, 2010, only to plunge 65% to Rs 121.70 on Wednesday.
Yet another ex-employee, who was with the operations team, alleged severe financial crunch was taking a toll on the company for long, though operations continue.
Many aggrieved employees especially from the top rung, refused to talk on the issue but concurred they have been asked to leave and that their departure was not amicable.
One of them alleged that Arshiya has not even paid to many of its vendors.
An analyst from a domestic brokerage who tracks the company said Arshiya is no exception and that the situation is the same with other logistics players who are in rough seas.
“Arshiya’s debt at the end of last fiscal was at Rs 2,300 crore -- not comfortable at all. The slowdown in the infrastructure sector is hurting its numbers, so it is obvious that they will resort to cost-cutting measures,” he said.
He said among peers, Arshiya is considered to be the better paymaster.