Voltas employees accept VRS

Voltas Limited, a Tata group enterprise, has informed that its voluntary retirement scheme (VRS) has been accepted by a large number of employees of its loss-making Hyderabad unit.

The company management was in dialogue with the employees union and after prolonged negotiations had recently got the acceptance for its VRS, Voltas said.

Voltas' Hyderabad unit is stated to have been adversely affected due to low capacity utilisation coupled with high wage costs, rendering the unit unviable. Founded in 1954, Voltas is India's premier air-conditioning and engineering services provider.

The VRS at the Hyderabad plant that employs about 820 workers was originally announced by Voltas in May this year. Under the VRS, the management has offered to pay 120 days salary for each year of service to those opting for the package. However, the employees union wanted a higher compensation and did not accept the offer at that time.

The unit has been in the red for the past 12 years except during 2000-02 when the company had contract manufacturing orders from LG and Samsung. These orders dried up after both the companies set up their own plants in India, encouraged by concessions and benefits offered to greenfield projects in some states.

The losses for the unit mounted steeply after 2002, and by May 2005, it was burdened by accumulated losses of over Rs 170 crore. After the stoppage of contract manufacturing orders, over 450 of the 800-plus workforce has become redundant.