Punjab Chief Minister Amarinder Singh on Thursday said Ranbaxy Laboratories Limited will compensate Rs 500,000 each to the next of kin of the two persons who died in the fire at the Mohali factory.

The pharmaceutical major will also offer employment to one member of the family of the deceased and also bear the medical expenses of the injured, Singh, who held the post of director in the company for 20 years before becoming chief minister, said.

Four employees are still battling for their lives with 45 to 75 per cent burn injuries in the Fortis hospital at Mohali.

Singh said the company would ascertain the cause of the fire and cooperate with the state government inquiry into the incident.

Ruling out sabotage, he said the fire probably broke out due to a leaking Toulene gas pipe, adjacent to a generator, which caused an explosion.

He said the company's managing director had assured him there were no toxic emissions following the fire. "The damage is limited to a small area and the factory is back in operation," Singh added.

Meanwhile, Ranbaxy claimed that the production unit where the fire broke out complied with all international safety standards.

Senior Vice President-Global Manufacturing, Pushpinder Bindra, said company followed the highest international standards required for such units.

He said it was the only major fire to have broken out since the company's inception in 1962, adding that it is difficult to prevent 'minor' fires 100 per cent in any pharmaceutical company where chemicals are involved.

Meanwhile, a number of villagers living adjacent to the factory gathered outside the Ranbaxy premises here demanding its closure.

"We want immediate closure of Ranbaxy factory here as there have been fires in the past as well, one in 1988, one in 1995 and now this one. Our houses were badly damaged and two young boys received injuries from pieces of flying glass. We demand that this factory which is very near to the residential area should be shifted elsewhere," said Harbhajan Singh, who lives in a village adjacent to the factory.