Tuesday, May 24, 2016

VRS will increase BSNL’s profitability, says CMD

BSNL CMD Anupam Shrivastava
IN A bid make the state-owned telecom operator Bharat Sanchar Nigam Ltd (BSNL) afloat in view of cut-throat competition from private players, a voluntary retirement scheme (VRS) is a “requirement”, says chairman and managing director Anupam Shrivastava. He told this to The Indian Express.
“BSNL, because of its scale and size, we spend almost over Rs 15,000 crore per year on our human resources, which is around 2,10,000 strong, and just to give you...
an idea, whatever Air India is earning from all its domestic, international operations, whatever they’re earning, that amount we’re spending solely on the salaries. That is the enormity of our salary expenses that we have to live with,” Shrivastava said.
BSNL’s average age was over 50 years, and despite training the staff BSNL could not milk its employees for more efficiency.
“Although we have tried by giving training, etc… it is not possible that we can make someone young. So in order to increase the profitability, we sent a proposal sometime back to the government to have VRS for BSNL,” Shrivastava said. The Centre was working to find out if the cost incurred on VRS will be justified or not.
“The cost of VRS is huge, the government was trying to consider whether it is justified to incur the cost. It is running to around Rs 18,000 crore-Rs 20,000 crore just for the VRS part for around 65,000 employees. So if we have to give VRS to one-third of the employees, the cost was coming to Rs 18,000 crore,” he said.
Recently, the Telecom Commission, an inter-ministerial decision making body, had cleared Mahanagar Telephone Nigam Ltd’s (MTNL) VRS plan for employees who are 50 years of age and above to save costs. The exchequer is expected to save around Rs 500 crore to Rs 600 crore every year by giving VRS to some MTNL employees. The NDA government has, in many ways, pushed for revival of the two public sector telecom companies, especially of BSNL because of the social obligations it fulfills.
“BSNL was a Rs 10,000-crore profit-making entity when the Atal Bihari Vajpayee-government exited in 2004, and when the Narendra Modi-government took charge in 2014, it was making a loss of Rs 8,000 crore,” Minister of Communications and Information Technology Ravi Shankar Prasad has said on past several occasions.
While VRS may be a must for BSNL as it walks on the recovery road, Shrivastava said that the need for the scheme was not emergent because the company, for now, can meet its salary expenses.
“But in order to make BSNL more profitable, to increase the efficiency further, VRS is a requirement,” he added.
Earlier, the Telecom Commission decided to offer a voluntary retirement scheme (VRS) to MTNL employees aged over 50 years, to save costs.
“Government can save around Rs 500 croreto Rs 600 crore in a year by giving VRS to employees aged over 50 years of Mahanagar Telephone Nigam Ltd (MTNL),” said an official.
“Their employee cost is 78 per cent of the revenue, so in effort to reduce employee cost that VRS scheme has been offered for three months, for 25 per cent of their people above 50 years of age.” he added.
The government would spend around Rs 2,000 crore, including an ex-gratia of Rs 1000 crore for this VRS decision. MTNL has around 46,000 employees, 26,000 of whom will be retiring in the next 10 years. Therefore, the government thought of saving costs by giving the VRS option to 20 per cent of its employees who are above 50 years of age. The proposal of the VRS will get Cabinet nod in the next few days.

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