Central PSUs spending on staff welfare, costs surge 30.2%

Staff welfare costs of central PSUs have grown at a higher rate between 2008-09 and 2007-08, compared to an increase in net sales during the same period.The staff welfare cost of 120 central PSUs witnessed a growth rate of 30.2%,while the average net sales of these companies increased by 21.2% in the same period.

Staff welfare expenses accounted for less than one percent of net sales of 120 central PSUs in 2008-09,adding up to Rs 1,284 crore, a 30.2% increase over the year 2007-08.

Though the central PSUs are spending a significant amount of money for their staff welfare,recently government declared that all profit making central PSUs who earned more than Rs 100 crore as net profit have to contribute up to 5% of their net profit for social sector projects.

Out of 120 central PSUs,only 46 companies registered more than Rs 100 crore net profit during 2008-09.If we consider 5% of that ,the amount turned out to be Rs 3,713 crore.This amount will be the extra burden of these 46 central PSUs .ONGC has to cough up the highest amount of Rs 806 crore followed by NTPC (Rs 410 crore),SAIL (Rs 309 crore),NMDC(Rs 219 crore) and NTC (Rs 209 crore).

Refineries,steel and electricity companies are spending a significant amount of money on welfare schemes for their employees.This study of 120 central PSUs ,reveals an increase in the ratio of welfare expense to net sales to 0.48% in 2008-09 from 0.45% in the year 2007-08. And the share of welfare expenses to net profit also increased from 5.39% to 7.53% during the study period.

In actual value terms, the staff welfare cost of 120 central PSUs steadily increased from Rs 4,251 crore in 2007-08 to Rs 5,535 crore in 2008-09.On the other hand,the total net sales of these companies also steadily increased from Rs 9.45 lakh crore to Rs 11.45 lakh crore in the same period.

Among the top five central PSUs according to the staff welfare cost, the highest growth in staff welfare cost was seen in BPCL (181.1%), Indian Oil (45.2%), SAIL (40.7%), ONGC (25.3%) and BSNL (4%).The highest net profit to sales ratio was registered in the case of BSNL.

The total staff welfare cost of BPCL increased from Rs 203 crore in 2007-08 to Rs 571 crore in 2008-09. From the year 2008-09 onwards,the corporate social responsibility (CSR) budget of the corporation is being increased from 0.5% to 2% of the net profit of the previous financial year of the company,reflecting the extent of BPCL?s commitment to the growth and development of society.

Significant decline in staff welfare cost was seen in the case of Power Finance Corpn.(-49.4%), ITDC(-37.8%), NMDC (-29.3%, Andrew Yule & Co.(-20.1%) and Hind Aeronautics (-11.3%).

The staff welfare cost of NMDC decreased from Rs 116 crore in 2007-08 to Rs 82 crore in 2008-09.