Tata Power unveils VRS

Company aims to pare workforce by 12%

Tata Power Company, the energy arm of the Tata group, has rolled out its maiden voluntary retirement scheme aimed at 400 personnel. If all the targeted employees avail of the VRS, then Tata Power will be able to pare its workforce by around 12 per cent.

The company had 3,361 employees as on March 31, 2004. The VRS, which opened on June 28 and slated to close by this month-end, is targeted at employees across the board.

However, those employed in operations and maintenance, who are core staff, cannot avail of the offer. Tata Power executives said "We have introduced the VRS but cannot discuss further details at this point."

Tata Power's employee costs stood at Rs 191.61 crore in 2003-04, of which Rs 138.82 crore was on account of salaries, wages and bonus. The balance Rs 52.79 crore was accounted for provident fund, gratuities, welfare expenses, pension, contribution to superannuation fund and leave encashment scheme.

Tata Power was initially planning a VRS in 2002-03 and had earmarked around Rs 24 crore for it.

The VRS is in line with the company's cost reduction strategy. Tata Power has over the last few years been working on a strategy to control costs.

The move comes in the light of the passage of the Electricity Act 2003, which has opened up the possibility of more than one power company selling electricity in a area.

Tata Power holds the licence to distribute power in vast parts of Mumbai and has chalked out Rs 6,200 crore expansion plan. The company is now derisking itself from its licensed area and is broadbasing its business model.