On a drive to cut operational costs amid adverse market conditions, Steel Authority of India (SAIL) has decided to reduce bonus payments to its over 70,000 non-executive employees by almost half this fiscal.
On a drive to cut operational costs amid adverse market conditions, Steel Authority of India (SAIL) has decided to reduce bonus payments to its over 70,000 non-executive employees by almost half this fiscal. While savings due to this is estimated to be nearly R100 crore this year, the PSU is also winding up many of its branch offices and pruning travel expenses of its senior executives, official sources told FE.
For the last three years, SAIL has been paying annual bonuses in the range of R8,330 to R18,270. While higher sums are given to workers in the five integrated units, with those in Bhilai Steel Plant receiving the highest, those in loss-making units get relatively less.
The SAIL management, ahead of the last Diwali season, had paid R9,000 per head as bonus for employees in integrated steel plants and R7,000 to those in other units.
“However, during the recent meeting with the representatives of National Joint Committee for Steel (NJCS), the management has clearly stated that it would not be possible for the company to match the amount of bonus paid in the last three years as the company is incurring losses,” said Biswajit Biswas, general secretary of the INTUC-affiliated Hindustan Steelworkers’ Union at the company’s Durgapur Steel Plant.
SAIL, which plunged into losses in the first quarter of this year after a gap of 13 years, reported a net loss of Rs 1,378 crore in the first half of this fiscal. Losses could touch Rs 3,000 crore for the current fiscal year, according to an internal estimate.
A SAIL official explained that the payment of bonus is always linked to the company’s profits and given the losses being made currently, all employees, including the non-executive ones, would have to bear the brunt.
SAIL has been reducing its workforce over the last few years thanks partly to attractive voluntary retirement scheme packages on offer — the number of employees came down from a high of 1.6 lakh in 2001 to the present 91,000.
Executives have been denied performance-related pay for the last three years in a bid to cut costs and grapple with subdued demand that increased pricing pressures. Even as demand remained tepid, the domestic steel industry is facing tough competition from surging imports, forcing the government to raise import barriers by imposing anti-dumping and safeguard duties on several products. While the primary steel makers are asking for more policy support, the users argue that the rising input costs could hit them and the economy as a whole.
Compared with the first half of the previous fiscal, SAIL’s turnover has dropped 18% in the first half of the current fiscal to Rs 20,797 crore. The revenue of another PSU, Rashtriya Ispat Nigam, also fell 5% to Rs 5,427 crore in the period.