BHEL, BSNL, Coal India warn of pay cuts after unmet targets, cash crunch

Facing a severe cash crunch and failure to meet targets, several public sector units (PSUs) have started putting in austerity measures and pressuring employees to tide over the situation. 

Bharat Sanchar Nigam Ltd (BSNL) has moved to impose a penalty recoverable from staff salary in proportion to non-achievement of targets. This has irked the Department of Telecommunications (DoT), which has asked the beleaguered telecom company to explain the reason for shooting off threatening letters to its employees. 

Earlier, upon recommendations of the audit committee, South Eastern Coalfields Ltd (SECL) — Coal India’s largest subsidiary which alone accounts for around 25 per cent of Coal India’s annual production — had moved a resolution to cut salaries of the senior staff by 25 per cent as the company could not meet its financial targets and failed in production parameters. 

Although the proposal was finally rejected by the SECL board, which felt it was too harsh, the move showed that PSUs have started to hold its employees accountable. “The move sent the message that things cannot be taken for granted henceforth, and employees had to deliver on their performance parameters,” a senior Coal India official said.

SECL sources said the proposal was mooted by independent directors at SECL, who wanted to bring in the practice of accountability of actions at a time when SECL was failing both in its production as well as financial targets. No other Coal India subsidiary had moved such proposal.

SECL, which in the last fiscal year surpassed 150 million tonne (mt) production mark, had then earned praises from its parent company but during April-August this year, its production fell by 14.3 per cent at 53.48 million tonne as compared to the similar timeframe of 2018 while sales fell by 9.8 per cent at 59.35 mt.

In the case of BSNL, a senior official said, “We have asked the company to explain how can they suo moto decide to cut salaries of their employees. It is against the labour laws.”

In a letter to the staff members, an official of BSNL’s Gurgaon branch said, “On reviewing the achievement for the month of August 2019, it has been found that many sub-divisions have not achieved their committed targets. Hence penalty in the form of recovery from salary in proportion to non-achievement of targets is hereby imposed.”

The deductions are to be exercised in the salary of the current month and will be rolled back if the concerned official achieves his pending as well as current month targets in September itself.

 It is learnt that these letters are being circulated by branch offices across the country to field officers who were unable to achieve their landline and broadband sale targets.

Employees at Bharat Heavy Electrical Ltd (BHEL), however, haven’t been as lucky. In a letter to the employees of its 30-odd divisions and offices, the human resource department of BHEL said cash outflow on various accounts need to be regulated to survive a situation of stressed cash flow and decided to discontinue the encashment of earned leaves for all its employees.

Multiple calls and messages to the BHEL spokesperson did not elicit any response, till the print time. "Cash outflow on various accounts are regulated to survive in the current situation and cash availability is prioritised for meeting working capital requirements of purchasing raw materials, manufacturing operations and project execution. Under these compelling circumstances, it has been decided to suspend 'in-service' encashment of earned leave," said the letter dated September 6, 2019.

It further said the current financial condition of the company demands restricted cash outflow to certain sections and accounts. The cash crunch is primarily owing to payment delays from several private power producers.

However, exemptions to this austerity drive have been provided for five instances including encashment used for higher education and marriage of children of employees. The order book of BHEL has remained stagnant at around Rs 1 trillion for the past four financial years and the share of new orders has come down by 70 per cent in 2018-19 over the previous year.

Slowdown in the power sector and late diversification hit the revenues of BHEL which were down to Rs 34,600 crore in 2018-19.