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Tisco golden handshake plan to cost Rs 100 cr
Arijit De
Mumbai, Jan 20: TATA Iron & Steel Co, the steel flagship of the Tatas, will spend about Rs 100 crore towards a voluntary retirement scheme during 1997-98 to pave the way for a leaner workforce.It is expected to prune nearly 5,000 workers from its total manpower of about 68,000 through the scheme, offered during 1997-98. The sum of Rs 100 crore set aside for the purpose is a substantial 28.2 per cent higher than that earmarked last year (Rs 78.7 crore for 1996-97). The Tata Steel management has been on a drive to reduce workforce in the liberalised era. It has been seeking to improve productivity per employee from, what was considered in the early 1990s to be, a low figure. During 1996-97, Tata Steel paid out a total of Rs 7.55 crore (against Rs 7.19 crore in 1995-96) on account of wages and salaries (including bonus). The figure stood at a substantial 14 per cent of "manufacturing and other expenses". The percentage was marginally down from 15 per cent of expenses in 1995-96. Tata Steel, due to the
past pre-liberalisation legacy of more than a century's operations, has one of the lowest per-employee productivity figures, which it must improve to provide better returns to the shareholder. The average labour productivity in the Indian steel industry was 45 man hours per tonne compared to a figure of four to five man hours per tonne for the developed world in January 1997. Hence the low cost advantage advantage of Indian labour is blunted by low productivity. The manpower requirement of the company has been rationalised in recent years due to the growth path chosen by Tata Steel, which involved closing down some of its older mills and steel melting shops, replacing them with technologically advanced steel making through the continuous casting route. Tata Steel is fighting an international trend of low return on equity, and is therefore being forced to reduce expenditure to the maximum possible extent. It is also facing the industry-wide problems of a recession in industrial demand and the rapid
proliferation of the number of players in the last few years, since steel was delicensed by the government.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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