VRS-Stakeholder Consultations Sep.2011

7/25/2019 VRS-Stakeholder Consultations Sep.2011

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Voluntary Retirement Scheme

PROPOSAL



Outline of the Presentation

• Need for VRS

• VR scheme

• Financial benets and attractions of the scheme

• Additional work opportunities for VRS optees

• Oerall e!penditure and sain"s for #SNL

2



Need for VRS

3



#SNL$S Financial Performance in recent years%All "ures &n Rs 'rores(

Parameters 2008-09 2009-10 2010-

2011

Income )*+,-. ).+/0* .1+2,3

Expenditure )0+)*0 )0+/3, )2+/3-

Net Prot *3* %4(-+,.) %4(2+),0

Salar !ost --)2) -)0** -)31-Salar !ost as" of totalincome

).5 0.5 026*5

4 4



#SN$%S Emploee stren&t'

(s )n *roup ( *roup# *roup ! *roup+ Industrial ,otal

)-7/)7/1 3+3/0 0,+)-. -+1,+)-.

0.+3)1 .+33) .+11+,0/

)-7/)7-/ 3+2-/ 03+,.. -+1.+**1

0-+012 .+2-) .+1.+-//

)-7/)7-- 3+1-) 0,+.// -+,)+01,

)1+2/, .+0-2 .+,-+2)*

..7/,7-- 33/* 03)-0 -,/),1 ),*31 .)-1 .+32+)/2

(era&e a&e of emploees . /9 ears5



Need for VR Scheme

• 'ompetition in telecom sector has become ery sti8

• Reenues are showin" declinin" trend

• #SNL income has been fallin" steeply in the last few years

• Salary costs are continuously risin"

• Ratio of salary cost to income has risen sharply from ). 5 in .//,4/1 to more than 025 in ./-/4--

• Sta8 to telephone ratio in #SNL is e!tremely hi"h in comparison toother telecom operators

6

9 l l : i %A )-7)7--(



9mployee a"e prole4 :roup4wise %As on )-7)7--(

• Aera"e employee a"e; Very <i"h =01 years

7

(&e *rp ( " of

,otal*rp(

*rp # " of,otal*rp#

*rp ! " of

,otal*rp!

*rp + " of,otal*rp+

,otal " of,otal

> 0/ ?ears

3+.,3

1.5 ))+-30

215 -+20+2.3

1/5 )*+/..

,)5 .+0/+ --/ ,*5

> 0* ?ears

2+033

,.5 .2+,)3

*25 -+*)+,/.

,05 .,+013

2,5 .+-*+2-) 335

> */ ?ears

*+233

3.5 -,+-/1

),5 -+/)+030

*25 -2+,1.

0/5 -+00+-*. *-5

> ** )+** 0*5 3+)3. -*5 0-+,20 .)5 2+),* -*5 *1+-,/ .-5



VR scheme Proposal

• &n iew of the challen"es posed by tou"h market

conditions+ company$s ery hi"h wa"e bill and with theob@ectie of improin" company$s nancial situation+ it isproposed to o8er VRS to about - lakh employees6

• he scheme o8ers not @ust nancial benets but also

certain opportunities to the VRS optees by way of whichthey can take up works outsourced by #SNL afterretirement6 his would create win4win o8er both for theemployee takin" VRS and the company6

Scheme to be made open to all employeesaboe 0* yrs6

8



#enets to emploees optin& for VRS

i( Financial #enets comprisin" of e!4"ratiapayment and other terminal benets

ii( Opportunity to work for #SNL afterretirement on indiidual basis or as a co4operatie and "et additional income

9



VR scheme Proposal

•

9!4:ratia lump sum amount as per the Bepatment of 9nterprises%BP9( scheme for mar"inal prot7 loss makin" enterprises i6e6salary %basicCBA( of )* days for eery completed year of sericeand .* days for eery year of serice left until superannuation6

•

he compensation is sub@ect to a minimum of Rs6.*+///74 or .*/days salary whicheer is hi"her6 <oweer+ the amount shall note!ceed the sum of the salary that the employee would draw atthe preailin" leel for the balance of period left beforesuperannuation and further+ it can not e!ceed 2/ months salary6

• he e!4"ratia amount will be in addition to all other applicableretirement benets6

10



Financial benets4 sample cases

11

• 9stimated amount payable to employees % sample

cases40* yrs+ */ yrs and ** yrs( in di8erent cate"orieshas been worked out and is shown in ne!t few slides

• &t is assumed that the lump sum payment receied onretirement is inested which fetches interest D -/5

• 9stimation is made for -/th sta"e in each scale

• Followin" assumptions are made for other benets ;i $eae Encas'ment salary for -/ months

ii*ratuit Salary for -* days of each completed year ofserice with ma!imum of Rs6-/ Lac



Financial benets4 %contd666(

12

iii(Pension 'ommutation; On the basis of commutationalues %dependin" on a"e(

A"e 'ommutation alue0* ?ears ,613-*/ ?ears ,6,/,** ?ears ,6*3.

i(ransfer :rant; One month salary plus "rantassumin" aera"e four family members includin" the

oEcial+ ransfer :rant for aera"e -/// km and otherapplicable benets

PF and &nsurance payments will be in addition to these

nanc a ene s o emp oyees op n"



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on$umpsu

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(nnualPension

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n permont'

NE-1 /332/4-))./

**/+-0, -*)+*)/ -*)+*)/ ..0+*2. -)+*22-+/1*+))

*-/1+*)0 23+/,2 1/:18

NE-2 /3,0/4-03//

***+1*/ -**+-01 -**+-01 ..2+1)/ -)+232-+-/2+,*

0--/+2,* 23+31) 1/8:4

NE-4 /31//4-0,,/

*2.+,/3 -*3+/2. -*3+/2. ..1+3.1 -)+,/2-+-./+02

2--.+/03 2,+2.1 1505;

NE-/ /,-*/4-*)0/

2/)+0.. -2,+)13 -2,+)13 .02+)/, -0+*32-+./-+-/

/-./+--/ 3)+*,. 1;1/1

NE-5 /,3//4-2,0/

2./+)/- -3)+-/3 -3)+-/3 .*)+-1, -0+,12-+.)0+2/

1-.)+02- 3*+20/ 1;592

NE-; /1/./4-30)/

20.+0*0 -31+.1/ -31+.1/ .2.+.0/ -*+)-2-+.3,+*1

/-.3+,*1 3,+)0. 1:184

NE-: -/1//4./0//

33.+3)1 .-*+20, .-*+20, )-*+0./ .-+2-/-+*0-+/2

*-*0+-/2 10+..1 20;95

NE-8 -.*./4.)00/

,,3+3.2 .03+3), .03+3), )2.+)*3 .*+.1/-+33/+,0

1-33+/,* -/,+.*- 24::8

NE-9 -)2//4.*0./

122+)-1 .21+23/ .21+23/ )10+0)3 .1+3,/-+1.1+,3

2-1.+1,, --3+,)0 25902

-01//4 -+/*2+*-.10+,0. .10+,0. 0)-+.*0 )-+01/

.+-/,+10.-/+,10 -.,+,)) 28411




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-+-2.+*)3

).0+0.1 ).0+0.1 030+*)/ 0-+*//.+).3+0.

0.).+30. -0-+32- 41209

E-23E2( ./2//402*// -+02.+-), 0/,+/), 0/,+/), *12+,.) 0,+00/ .+1.)+033 .1.+)0, -3,+.1* 49220

E-4 .01//4*/*//

-+323+*0-

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1)*.+131 .-*+*)2 /:4:;

E-/ .1-//4*0*//

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*32+0)* *32+0)* ,0)+-)/ *1+,,/0+-.-+00

/0-.+-00 .*-+,33 55445

E-5 ).1//4*,///

.+))0+*23

2*-+*/3 2*-+*/3 1*.+1)2 21+)0/0+2*1+,*

,02*+1,2 .,0+2,/ ;255;

E-: 0).//422/// )+/2.+03- ,*0+20) ,*0+20) -+.*/+/** ,)+-0/ 2+-/0+1*) 2-/+01* )3)+00. 81995

E-9 <E9(

2.///4,////

)+,*/+*/3

-+/30+*2/-+///+/// -+*3-+3-1 -/2+1//3+2/)+2,

232/+)21 021+*)2 102/9




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NE-1 /332/4-))./

*3*+3)2 -*)+*)/ -1-+1-. ../+0,. -)+*22-+-**+..

2--*+*.) 23/,* 1521:

NE-2 /3,0/4-03//

*,-+,/, -**+-01 -1)+1)2 ...+,/3 -)+232-+-23+)3

2--2+3), 2331) 154:8

NE-4 /31//4

-0,,/ *,,+1,0 -*3+/2. -12+)., ..*+*** -)+,/2

-+-,-+3)

* --,+-30 2,2.1 155;:

NE-/ /,-*/4-*)0/

2)-+0,, -2,+)13 .-/+012 .0-+,). -0+*32-+.22+3,

1-.2+231 3)*,. 1;;88

NE-5 /,3//4-2,0/

201+-*. -3)+-/3 .-2+),0 .0,+*13 -0+,12-+)/.+-)

2-)/+.-0 3*20/ 1:15/

NE-; /1/./4-30)/

23.+))2 -31+.1/ ..0+--. .*3+03* -*+)-2-+)0,+*.

1-)0+,*) 3,)0- 1::;;

NE-:

-/1//4

./0// ,/,+2,/ .-*+20, .21+*2/ )/1+2,1 .-+2-/

-+2.*+-,

3 -2.+*-1 10.., 2149;

NE-8 -.*./4.)00/

1.1+/-2 .03+3), )/1+23. )**+33) .*+.1/-+,23+0,

1-,2+301 -/,.*/ 2/584

NE-9 -)2//4.*0./

-+/--+.20

.21+23/ ))3+/,, ),3+.3/ .1+3,/.+/)*+/3

../)+*/3 --3,)0 2;::8

NE-10 -01//4.3,*/

-+-/*+2*2

.10+,0. )2,+**. 0.)+0-, )-+01/.+..)+1*

,...+)12 -.,,). 292;9




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-+.-2+2/, ).0+0.1 0/*+*)2 02*+1/, 0-+*//.+0*)+1,

-.0*+)1, -0-32- 422;

E-2

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./2//4

02*//

-+*)/+-00 0/,+/), *-/+/0, *,*+131 0,+00/)+/,.+20

1

)/,+.2* -3,.1* /05/

E-4 .01//4*/*//

-+,01+3*. 01)+.23 2-2+*,0 3/,+)3* *0+.)/)+3..+./

,)3.+..- .-**)2 /898

E-/ .1-//4*0*//

.+-2-+2). *32+0)* 3./+*00 ,.3+,-- *1+,,/0+)02+)/

.0)0+2)/ .*-,33 5:20

E-5 ).1//4*,///

.+00)+-*. 2*-+*/3 ,-0+),0 1)*+2.- 21+)0/0+1-0+//

001-+0// .,02,/ ;/;:

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)+./0+1-. ,*0+20)-+///+//

/-+..3+)0. ,)+-0/

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2)3+//0 )3)00- 8/20/

E-9 <E9(

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0+/.1+2//-+/30+*2

/-+///+//

/-+*0)+-2. -/2+1//

3+3*0+...

33*+0.. 021*)2104:/

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NE-1 /332/4-))./

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1-.-+).1 23/,* 15:0

NE-2 /3,0/4-03//

2/3+222 -**+-01 .).+3.) .-2+,)3 -)+232-+..2+/*

--..+2/* 2331) 158;

NE-4

/31//4

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-+.0-+-)

* -.0+--) 2,2.1 1;0;

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NE-5 /,3//4-2,0/

23,+//) -3)+-/3 .*1+22- .0-+1)2 -0+,12-+)23+2/

)-)2+32/ 3*20/ 1::0

NE-; /1/./4-30)/

3/.+.-, -31+.1/ .2,+1)0 .*/+*33 -*+)-2-+0-2+))

*-0-+2)0 3,)0- 1844

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) -3/+230 10.., 220:

NE-8 -.*./4.)00/

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/-12+--, -/,.*- 254;/

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NE-10 -01//4.3,*/

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)0*2+0)/ .*-,33 5902

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.+**-+3)3

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/-+*/-+,-0 -/2+1//

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/



Attractions of VRS o8er

• he VRS optee will receie substantial lump sum amount on

account of e!4"ratia and other retirement benets6 his amountcan be utiliHed for meetin" dierse needs such as purchase ofmoable7 immoable assets + hi"her education of children+solemniHin" marria"e of children etc6

•

he whole or a part of the VRS amount can also be deposited inarious hi"h4interest bearin" lon"4term inestments or ininestments which brin" in monthly interest components6

• he amount receied by optees will enable them to plan their

future much better and at a relatiely youn"er a"e+

• hus+ VRS amount will enable optees to si"nicantly enhance theirlifestyle and social status as also plan a safe and secure future fortheir family6

19



Attractions of VRS o8er %'ontd666(

#enet of earl restoration of full pension

• &n the eent of retirement on normal superannuation+ fullpension is restored at the a"e of 3* years %-* years afterthe normal retirement a"e(6

•

<oweer+ a youn"er VRS optee+ e6"6 a 0* year old VRSoptee+ will "et full pension restoration at the a"e of 2/years %0*C-* yrs(6

• Restoration of full pension at a youn"er a"e %compared to3* years (will be hi"hly benecial because the personwould in much better physical and mental condition tomake optimum utiliHation of money6

20



Attractions of VRS o8er %contd66(

• Furthermore+ after takin" retirement+ an indiidual will befree to take up employment elsewhere as per applicable:ot6 Policy or start entrepreneurial enture6

• A "roup of #SNL VRS optees can also form a cooperatieand undertake works outsourced by #SNL%e!plained infurther slides(6

21



)pportunities to emploees afteraailin& VRS

22

Actiities which can be outsourced to



Actiities which can be outsourced tocooperaties

•Iaintenance of small e!chan"es %J*K RS(

• Iaintenance of Passie infrastructure i6e6 Powerplant+ battery

• #roadband proisionin" and maintenance

• 9PA#M installation and OI

• Serice leel A"reements%SLAs ( between #SNLand the cooperatie6

•

Ownership of entire euipment with #SNL6• Operational e!penditure by the cooperatie and

sharin" of reenues

Other actiities which can be outsourced to



Other actiities which can be outsourced tocooperaties %contd666(

.( Sellin" #SNL products and serices bybecomin";

•Birect Sellin" A"ent %BSA(

•

Rural Bistributor•Franchisee

•'hannel Partner for small 9nterprise 'ustomers

)( #ill Bistribution0( Recoery of Outstandin" amount

'ommission and incenties will be "ien as per #SNL$s policy



Financial &mplications and sain"s to #SNL

25



Financial &mplications of proposed VRSOne time lump sum e!penditure for Bo and #SNL

49stimation for =- Lac VRS OpteesS=N

=

Item of Expenditure +o, lia>ilit #SN$ $ia>ilit

( )ne time lump sum expenditure on

- 9!4"ratia ,+2** 'r %Bo is reuested to fund (

. :ratuity )+)03 'r

) Pension commutation )+030 'r

0 Leae encashment .+0** 'r

* 6A6 for settlement at place of

choice

.*/ 'r

,),($ ?15/:; !r ?2:05 !r

@,'ere Aill >e annual additional expense on Pension6+R due to earl retirement=

and26

Summary of Sain"s to #SNL on account of wa"es



Su a y o Sa "s o S o accou o a"es

9stimation for =- Lac VRS optees

ear Sain& in Rs!rores

2012-14

4::9

2014-1/

4:22

201/-

15

4;/:

2015-1;

45/8

201;-1:

4/24

201:-18

4252

2018-19

4010

ear Sain& inRs=!rores

2020-21 2448

2021-22 19;;

2022-24 15//

2024-2/ 1109202/-25 :18

2025-2; 490

202;-2: 12/

27

,otal sain&s on Aa&es . Rs 452;; !rore=



'onclusion

•

VRS scheme is likely to be benecial both for theindiiduals optin" for oluntary retirement and for#SNL$s reial6

• Qin4Qin opportunity for both

VRS-Stakeholder Consultations Sep.2011

Documents

Transcript of VRS-Stakeholder Consultations Sep.2011