Balmer Lawrie and Company has closed down one of its industrial packaging units located near Mumbai and offered voluntary separation scheme to all workers there.

The company, which is up for divestment, plans to relocate the machinery to other locations and sell the land.

Speaking to the media after the 86th annual general meeting of the company, P K Bishnoi, managing director, said the move was aimed at improving productivity and increasing efficiency. The plant at Turbhe used to manufacture steel drums.

"We are not bringing down the capacity. The company will step up the production at other two manufacturing units in the western region at Sewri and Silvassa," Bishnoi said.

In fact the company may look at increasing the capacity by adding one more manufacturing capacity at Asauti in north, where it has acquired land. Turbhe had the capacity to produce 540,000 drums.

After the relocation of plant and machinery is over, BLC will sell the land. The company is expecting around Rs 7-8 crore (Rs 70-80 million) by selling the land, which is located near Navi Mumbai.

Apart from restructuring the business, the company has also rationalized its workforce this fiscal by giving VSS to 183 employees.

With this reduction, the number of employee in the company has come down to 1450. BLC sources said there was no plan to further downsize in this fiscal. It has spent around Rs 5 crore (Rs 50 million) in 2003-4 to shed the workforce.

The steel drum industry experienced stagnation in the last fiscal with margins under pressure due to increase in the CR steel prices.

BLC continued to be a market leader in this segment but its performance was also affected by increased input price.