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Wistron violence: Govt probes wage delay charges; iPhone shipments least impacted

While the state government expects report on Wistron incident in the next 2-3 days, third-party staffing contractors said they are cooperating with all investing agencies

Rukmini Rao | Sonal Khetarpal | Nidhi Singal | December 17, 2020 | Updated 00:17 IST
Wistron violence: Govt probes wage delay charges; iPhone shipments least impacted
Third-party staffing companies such as Quess Corp, Adecco, Innov Source, Randstad are under scanner for contracting labour to Wistron

Following the violence at Wistron's manufacturing facility in Narasapura four days ago, Karnataka's labour department had initiated a probe to verify the allegation of non-payments of wages to the workers. Sources told Business Today that while notices have been sent to several third-party contractors including Quess Corp, Adecco, Innov among others, a report to the state government is also expected to be submitted in the next 2-3 days.

Wistron in a letter to the Government of Karnataka said that it was closely working with state government to ensure such incidents do not recur and support the police investigations.

"We bring the best of practices worldwide to our plant and operations and want to protect workers' interests. We will work together with the state government to ensure plant operations are resumed at the earliest," wrote Sudipto Gupta, Managing Director, Wistron India.

Wistron Corporation in its latest filing to the exchanges had said that the company was assessing the extent of the damages in various areas of campus. "Unlike earlier reports stated, the violence did not cause any material damage to major manufacturing equipment and warehouses, with preliminary estimates of damages in the range of NTD 100 to 200 million (Rs 27-52 crore)," the company had said in its filing.

It further said that the company was working with the related government authorities and police officials regarding investigation of this incident as well as negotiating with insurance companies. However, the FIR filed by the police, following a complaint filed by the company through one of its executives, stated extensive damage to building infrastructure, and theft of smartphones causing an estimated damage of Rs 437 crore.

While Apple has also started it's own investigation, the loss of production from the facility is likely to not have any impact on the shipments. Prachir Singh, Senior Analyst, Counterpoint Research, estimated Wistron's production losses to be less than 10 per cent due to the closure of the factory.

"Wistron has been manufacturing iPhone SE 2020 at the Kolar plant and iPhone SE 2020 contributed to one-third of the overall shipments for Apple in Q3 2020. However, we believe that going forward, the demand will shift to the newly launched iPhone 12 series and there would be negligible losses for Apple," Singh said.

Prabhu Ram, Head - Industry Intelligence Group, CMR, said that in the third quarter of 2020, the new iPhone SE 2020 and the iPhone 11 performed exceptionally well, contributing to as much as 70 per cent of Apple's iPhone shipments. "I believe there will be potentially very negligible impact on iPhone SE performance going forward," he further said.

After visiting the affected plant, All India Central Council of Trade Union also sent its observation the government. In its report AICCTU said that workers were mandated a compulsory 12-hour work shift and the payments were far below the promised Rs 22,000 monthly wages with no grievance redressal mechanism. Third-party staffing companies such as Quess Corp, Adecco, Innov Source, Randstad are under scanner for contracting labour to Wistron.

Rahul Banerjee, Vice President, Corporate Affairs, Quess Corp said the company has a policy of not commenting on specific companies, owing to potential customer and contractual obligations.

"We trust the legal system will move quickly to redress the situation and allow this critical manufacturing facility to come online at the earliest. We are extending all possible support to legal agencies conducting investigations, including providing them with documents," he said.

Similarly Adecco Group in a statement said that it was working with all parties to investigate these allegations and is committed to defending the rights of employees to a fair compensation and employment benefits.

Also Read: Wistron estimates Rs 52 crore loss after protests at the Karnataka plant

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