Ashok Leyland Ltd, India's second largest commercial vehicles manufacturer, has announced a voluntary retirement scheme (VRS) at its Ennore facility, which employs around 6,300 out of the total employee strength of 13000-odd in the company.
The company, through the latest VRS, is hoping to bring down the employee strength in Ennore facility by 800. The Ennore plant, which manufactures the Leyland engine platform, contributed around 40 to 50 per cent of the total production during last fiscal ended March 2001.
Confirming the development, J N Amrolia, executive director (HR), Ashok Leyland, said: "The scheme, which was offered to employees at Ennore facility last Saturday will remain open for two weeks. The maximum compensation per employee has been capped at Rs 6 lakh."
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It may be mentioned that Ashok Leyland announced a voluntary retirement scheme in June 2000 and around 200 employees opted for it.
The details of the scheme are as follows, every VRS optee will be paid 2.5 times of Basic plus dearness allowance (DA) for every completed year of service, subject to a maximum of Rs 5 lakh per employee, and 1.5 times for every remaining service period. Only employees who had completed 10 years of service and over 40 years of age could opt for the VRS, he added.
Amrolia said, "The average cost per employee through this VRS might be around Rs 5 lakh. However, this depends on the profile of the employees opting for VRS."
Assuming that the outgo is Rs 5 lakh per employee, Ashok Leyland will shell out Rs 40 crore through this latest VRS offered at its Ennore facility. It may be noted that the average cost per employee during the last round of VRS was Rs 2.4 lakh.
To provide a 'Safety net' for its retired employees, the company would make available a pension scheme, through their existing pension fund with Life Insurance Corporation, and medical cover. The medical cover will be made available through New India Assurance and will cover major sickness.
Apart from the above mentioned additions, VRS optees has been given three options to receive their compensation. They are, a one time lump-sum payment, monthly income plan and invest in fixed deposit with the company for a period of three years at 10 per cent interest.
The need to reduce manpower at Ennore plant was necessitated by increasing customer preference towards the Hino and the Iveco engine platform.
The Ennore plant, which is the oldest among all plants, manufactures Leyland engine platform and Hosur-I and II manufacture the Hino and Iveco engine platforms.
It was only last month, AL and the employees union at the Ennore plant signed a three year wage pact that fetched an average hike of more than Rs 3,000 for all employees.