50% of IFCI’s employees go for VRS

After the failure of India’s oldest financial institution-IFCI-to divest 26 per cent stake, over half of its employees have opted for voluntary retirement...

After the failure of India’s oldest financial institution — IFCI — to divest 26 per cent stake, over half of its employees have opted for voluntary retirement scheme (VRX) that can help the government restructure the company and attract another partner.

“About 250 employees of the total workforce of 470 opted for the VRS scheme, which closed on February 29. This will help the financial institution to save Rs 27 crore and improve enterprise value,” sources said.

Finance minister P Chidambaram has made a provision of Rs 433 crore in the budget 2008-09 for restructuring old liabilities of IFCI.

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Sources said 54 per cent reduction in workforce is in line with the intended business plan in the changed circumstances.

The rightsizing would cost the company about Rs 45 crore. However, it would not negatively impact the number of executives in specialised disciplines, those who would be required to meet the human asset requirement in the emerging business context, they said.

IFCI offered severance package up to a maximum of Rs 15 lakh, over and above the normal retirement benefits.

IFCI CEO and Managing Director Atul Rai had earlier said “a signal has been sent to them (employees) over the last few months that the business model of the company will under go a change.”

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“In the changed scenario IFCI will not be able to provide for the existing wage bill beyond 2009-10, he had said.

Sources said, there has been a reduction of 81.51 per cent in the workmen and non-executive category, wherein 96 workmen employees out of a total of 119 workmen employees have sought VRS.

In the officer cadre 155 officers have sought VRS out of a total of 351 officers, a reduction of 44.16 per cent. IFCI Board had earlier aborted the process for equity sale to a strategic partner, rejecting the demand for the management control by the successful bidder in December 2007.