The first batch of applications for the Steel Authority of India's (SAIL) new voluntary retirement scheme (VRS), which opened on March 1, 1998, have started trickling in with Calcutta being the first major centre to respond to the scheme. The new VRS will initially be open for six months beginning March 1. For the present the SAIL management has no immediate plans to extend the VRS window beyond the 6-month limit and applications would be accepted on a first-come, first-serve basis.
Company sources said, so far there has been no target set for the expected reduction in workforce as a consequence of the VRS window. "It is too early at this stage to make any kind of assessment of the number of responses we are going to receive to the scheme," they added.
Also, as anticipated by SAIL chairman Arvind Pande, there have been no hostile reactions from the trade unions so far. The reaction at the time of announcing the VRS was neutral largely due to the fact that scheme does not entail compulsory retirement.
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While Calcutta is the first major centre to have responded to the scheme there has also been a small movement of applications from the smaller SAIL units including a couple of the company's steel plants, sources said. The scheme is designed on the lines of a deferred income scheme whereby employees who opt for VRS would be paid a percentage of their last drawn salary for every month till the date of superannuation. There are two optional eligibility criteria for the scheme. Either the applicant would have to be over 50 years of age or have more than 20 years of work experience with the company.
Significantly, the public sector steel major will also simultaneously undertake extensive counselling of its workforce while opening the VRS offer to counsel good workers against opting for the scheme as is usually the case with such schemes.
The new VRS window marks a serious effort by the steel major rectify some of the damages made to its performance during the current financial year. Another significant move being made by the company to cut losses next year is to curtail production in the first quarter of the next financial year in a bid to offset domestic market pressures and escalations in input costs.
While the steel major's management is still confident that it would be able to achieve its target of saving Rs 800 crore through cost cutting measures, it has been considerably hit by a Rs 700 crore increase in input costs during the current fiscal in addition to Rs 1000 crore already incurred as input cost burden last year.
During the next fiscal, SAIL envisages a 22 per cent growth in sales and a 43 per cent growth in exports. On the export front SAIL plans to sell about 1.5 million tonne of steel and pig iron in overseas markets.