New Delhi, May 8: Steel Authority of India Ltd (SAIL) has come up with a voluntary retirement scheme (VRS) for its nearly 90,000 employees, following a downturn in business.
SAIL said it had no fixed job-cut targets, but sources said it wanted to retire 1,500-2,000 employees at a cost Rs 400-500 crore. The scheme, which targets employees aged 50 years and above, offers full salary and dearness allowance for the remaining years of service or 45 days' pay for every year served.
Lower sales on account of a "huge surge in imports of low-priced steel" from countries such as China and Ukraine had resulted in SAIL announcing a Rs 1,528.7- crore standalone net loss for the quarter ended December. The steel behemoth had reported a profit of Rs 579.1 crore in the same quarter of the previous fiscal.
Steel imports last fiscal accounted for 14 per cent of the country's total consumption, which rose by 4.3 per cent during the period, a development that does not bode well for the domestic producers of the metal. Moreover, after registering four consecutive months of decline, imports rose over 18 per cent in March as against last year, latest data by Steel Ministry's Joint Plant Committee (JPC) showed.
SAIL's income during the October-December quarter dropped 19.5 per cent to Rs 8,939.1 crore. Other steel companies are also in deep distress with many of them being declared stressed assets by banks. Tata Steel has also put up its UK units for sale.
To address the capital requirements of domestic steel companies, the government is looking to create a fund under the National Investment and Infrastructure Fund (NIIF), which has a corpus of Rs 40,000 crore.
SAIL's VRS offer, which has been sent to the employees under the signature of Vani Kapoor, is applicable to those who have put in at least 15 years of service and are over 50 years of age. Those who accept VRS, will be eligible for continued medical facilities, leave encashment and pension. The scheme is valid from May.
Out of SAIL's nearly 90,000 employees, about 14,000 are in the management, while nearly 74,000 are mostly highly-skilled workmen such as blast furnace operators, welders and fitters. The average age of a SAIL employee is 47 years.
This is the second time that the steel maker has come up with a VRS offer in the last 12 years. Officials said most employees were not too interested in the scheme as they expected an increase in salaries and gratuity rates after the announcement of the Seventh Pay Commission.
Usually, most companies, especially PSUs increase salaries after the government announces its new pay scale for employees.
SAIL's problem is that even in the middle of a downturn in the steel cycle, it is committed to a Rs 72,000-crore modernisation-cum-expansion programme forced upon it by previous steel ministers and agreed to by the previous chairmen.
This huge expansion is eating into the PSU's reserves and forcing it to borrow more money. The company had a debt of Rs 28,220 crore at the end of March 2015, an increase of 75 per cent over three years.
The SAIL shares remained unchanged on Friday on the Bombay Stock Exchange at Rs 42.20 against a 52-week high of Rs 73.70.
source - telegraphindia