The main objective of the proposal is to see that the productivity of each employee goes up in an effective manner. "Although, we are looking at different options to reduce the number, we may not go in for a voluntary retirement scheme in line with other existing firms," UB group chief financial officer AK Ravi Nedungadi said.

McDowell would reward the employees who want to leave the firm and associate distilleries before retirement. "We will not retrench any of our employees without some kind of compensation. Details about the total number of employees to be reduced and the package are still being worked out," he added.

The proposed cutting of labour would help McDowell maintain its profit over the next few years by bringing down the operational cost. During 1998-99, the company had reported a profit from operations of Rs 38.04 crore.It had spent about Rs 30 crore towards salaries, wage and bonus for conducting manufacturing operations in 1998-99.

According to sources, the decision was in line with the recommendation from global consultants Andersen Consulting. McDowell had assigned Andersen to look into all aspects of cost reduction in various areas of operations and it is expected that the study will be completed during the current fiscal.

The proposed merger of McDowell's stand-alone distilleries under a single umbrella and the recent computerisation of facilities have also forced the Vijay Mallya-promoted company to bring down the number.

McDowell has already started implementation of SAP R/3, the leading enterprise resource planning package. The company is also planning to unveil its own web page connecting both customers and suppliers. In order to become the least cost producer in the industry, McDowell has also decided to adopt a three-year capital expenditure plan for revamp and upgradation of its distilleries. The company would invest Rs 100 crore over a period of few years to this end.

Apart from rewarding the labour-force through an employee stock option plan, McDowell has initiated an extensive programme for training of its employees. The objective is to upgrade the technical skills of its human resources and to implement standards of best practice as an integral part of the UB group culture. The company is in the process of investing funds for brand-building.