SAIL to soon launch Rs 400-crore voluntary retirement scheme

By: | Updated: December 23, 2015 9:45 AM

Set to report its first net loss in 13 years this fiscal, SAIL aims to reduce its workforce by 1,500.

SAIL Sources said SAIL is likely to approve the VRS plan in its next sitting, scheduled towards the middle of next month.(Photo: Reuters)

Set to report its first net loss in 13 years in the current fiscal, state-run Steel Authority of India (SAIL) will soon launch a nearly Rs 400-crore voluntary retirement scheme (VRS) after a gap of nearly 10 years, aimed at reducing its workforce by 1,500 from the current 91,000.

Sources said the company board is likely to approve the VRS plan in its next sitting, scheduled towards the middle of next month. The VRS would be rolled out immediately after the board’s nod across its five integrated steel plants and non-plant set-ups, targeting both executive and non-executives.

SAIL had been saddled with excess manpower throughout. It had a staff strength of 1.47 lakh in 2001. As earlier, there still exists considerable excess manpower in the non-plant departments, which constitute around 20% of the company’s workforce. Natural attrition reduces employees by around 4,000-5,000 every year, a source in the company said.

“The proposed VRS would be launched with the idea of pruning both executive and non-executive redundancies. Though the company is fine-tuning the age-limit and the entire package, the scheme is likely to be offered to workers who are in the 46-50 years age bracket. SAIL is likely to keep both the deferred payment option as well as one-time payment option open for employees who would be opting  for VRS,” a source said.


While SAIL’s personnel director N Mohapatra did not offer any comment on the issue, a company source said that the VRS was required to be launched to give young employees a chance to pursue a career of their choice and at the same time, an opportunity to leave the company to those who want to spend their days with near and dear ones.

“The target has thus been kept conservative, keeping all these in mind,” he said. However, he added that there would not be any freeze on fresh recruitment by the company. SAIL would continue to induct young people to correct the skewed skill-gap.

Labour productivity in SAIL is the lowest even among its Indian steel peers. Its cumulative labour productivity for the April-August period of the current fiscal stood at 314 tonne of crude steel (TCS)/man/year compared with the international benchmark of 500-100 TCS/man/year.

VRS had also been launched earlier in the Maharatna company. It had launched a VRS in mid-1998 and then introduced a “sabbatical leave” scheme in 1999, under which employees could take a break from the company for two years for studies/employment elsewhere. Between late 1999 and early 2001, SAIL had launched another VRS for its employees. The last one was launched in 2006 but since then, no VRS was launched.

The current situation of the domestic steel industry, which is plagued by higher imports, lower prices and anemic demand within, also made a compelling reason for SAIL to cut down its employee cost, which currently constitutes around 21% of the gross sales compared to 16.69% in 1999-2000. SAIL has already reported a Rs 1,057-crore net loss in the first quarter. According to brokerage firm Motilal Oswal, the company is expected to report an adjusted loss of Rs 3,303 crore in the current fiscal compared with a net profit of Rs 2,093 crore in the last fiscal.

Incidentally, capacity expansion that would take SAIL’s annual steelmaking capacity to 23.1 MT is currently underway in all of them, and expected to be completed by the end of current fiscal.

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