RCom raises retirement age to 65

Reliance Communications has decided to increase the retirement age for its employees from 58 to 65 years, perhaps the first time such a decision has been taken by a private sector company In India.

The retirement age at most private sector companies is between 58 and 60 years, although some top executives have been given longer tenures.

The company is likely to announce this decision on Monday. However, an RCom spokesperson refused to comment on the matter.

According to sources, extending the retirement age by seven years will benefit about 1,500 employees of the nearly 40,000 employed by the Reliance Dhirubhai Ambani Group telecom company in the next two years.

This step must be seen in the context of reports that high growth industries like telecom are finding it difficult to recruit sufficient staff.

Recently, the government had moved a cabinet note increasing the retirement age for central government employees from 60 to 62 years.

According to an Intellectual Capital Audit that RCom undertook sometime ago, the company's intellectual capital (value of the skills and knowledge of the employees that is not reflected in the balance sheet) stands close to $4 billion (about Rs 16,000 crore), about $1 billion (Rs 4,000) of which is contributed by employees who are above 55 years of age.

While the company will retain this valuable capital for some years longer, it is also expected to grow to $1.8-2 billion (Rs 7,200-8,000 crore) in the next 5-6 years.

RCom, which recently received permission to also set up GSM services in 13 circles, plans to start operations in six months and will require a large number of people to man this expansion. It also plans to launch direct-to-home and IPTV services which will also require more staff.

RCom is also in the process of coming out with an ESOP scheme for employees. It will issue stock options to employees not exceeding 5 per cent of the paid-up share capital of the company. The company has close to 206 crore paid up shares currently.