Crompton Greaves proposes to reduce the employee strength of its Belgium operations. About 260 of the 730 employees there are expected to be affected.
In a communiqué to the stock exchanges, the company said it had been evaluating opportunities to improve the viability of its various businesses.
It pointed out that the transformer market in Western Europe was facing over capacity and pricing pressure. For competitive and sustainable operations, it has decided to optimise its Belgium operations.
This, the company said, would be done through both administrative cost reduction and right-sizing of workforce. For this, it has begun discussions with the Belgian Works Council as required by the Belgium Labour Regulations.
A recent Citigroup report said that the company’s international power systems business loss (EBIT) was Rs 36.6 crore in Q4 FY12. Further, the management hinted at tough markets and “continuing inefficiencies” in international operations which it is trying to address.
A Merrill Lynch report indicating a partial shift in manufacturing to low-cost plants, said during Q4 FY12, Crompton Greaves has reorganised its European manufacturing strategy by transferring key technologies across its three major plants in Belgium, Hungary and Ireland.