Maruti Udyog Ltd's voluntary retirement scheme (VRS) announced yesterday may be one of the most attractive in the Indian manufacturing sector, according to analysts. A company official disclosed that the average outgo per employee will be around Rs 7 lakh. This being the case, it is one of the most attractive VRS on offer in the domestic manufacturing sector, especially in the automobile industry.
Tata Engineering is offering VRS to 1,500 employees this year and the total outgo is expected to be Rs 75 crore. In other words, on an average the outgo per employee will be Rs 5 lakh. Bajaj Auto, which reduced its staff strength by around 2,000 persons during the last financial year, spent around Rs 4 lakh per employee.
The best VRS schemes were offered by public sector firms such as Bharat Heavy Electricals which spent around Rs 6.5 lakh per employee. "Hence, by these standards, if the company's management is to be believed, the Maruti scheme is very attractive," an analyst with a Delhi-based securities firm said.
"But one should not compare a Bajaj VRS with a Maruti VRS," says an analyst with Motilal Oswal Securities of Mumbai. He explains, "The wage cost at Bajaj plant is very low since these plants are located in backward areas. In the case of Maruti, the plant is located in Gurgaon, close to Delhi and the employees work in a more automated environment and hence, are well paid."
Bajaj Auto sources said that the annual cost per employee for the company last financial year was Rs 2 lakh. "In this light, we gave two years' salary in the VRS package. Maruti Udyog's average annual cost per employee is close to Rs 4 lakh. So, it is offering less than 2 years' salary in the VRS package," sources said.
Around 20 per cent of the Maruti Udyog employees, close to 1,000 out of the 5,700 strong workforce, are eligible for the scheme. Sources said some employees have already started availing of the scheme.
As per the scheme, technicians and assistants and those having ranks of supervisors and below managers will be eligible for the scheme if they are of 40 years of age or above or have put in at least 15 years of service. For those holding managerial posts or above, the minimum age limit is 50 years.
Technicians and assistants are being offered three months salary (basic+DA) for each year of service or remaining, whichever is less. Supervisors and those holding ranks below manager are being offered 45 days salary for each year of service put or remaining, whichever is less.
Managers and above will be given two months salary for each year of service put or remaining. Departmental managers and those ranked above are entitled to one month's salary for each year of service or remaining, whichever is less.
Besides, the management has decided to give Rs 2 lakh of medical support for self and spouse for every year of service remaining. The payment will be made by the insurance company and the company will only bear the premium. This grant is, however, discretionary.
Also discretionary is a grant of additional incentive in the form of a 24-month salary to employees opting for the scheme.
