VRS  -   Telecom minister Manoj Sinha informed the upper house

Loss making PSU MTNL has demanded more than Rs 1000 crore as support from the central government to offer VRS to its employees. Besides, the telecom firm, that operates only in two circles – Delhi and Mumbai – has requested the government to frame its VRS as per the Gujarat model of VRS, the Rajya Sabha was informed.

“MTNL has submitted a proposal to the Department of Telecommunications for Voluntary Retirement Scheme (VRS) based on Gujarat pattern,” telecom minister Manoj Sinha informed the upper house in a written reply.

Gujarat model of VRS is primarily adopted by PSUs, both central as well as state, that are marginally profit or loss making, or even by those PSUs that are sick and unviable. The model, adopted by the Central Government in 2000 in its VRS for CPSEs (Central Public Sector Enterprises), offers 35 days of salary for each completed year of service, and 25 days of salary for each year of service left till superannuation. However, the total compensation in this method of calculation, should not exceed the sum of salary for the balance period left till normal retirement, the scheme says.

In terms of employee numbers that can be considered for VRS, the operator has submitted the proposal for 20% of its workforce, a total of 5312, that are retiring in next 10 years. The operator has asked for 100% government support in financing the VRS scheme which would require Rs 1067 crore.

“The proposal is for 20% of its employees and seeks 100% Government support of Rs.1067 crores for implementation of VRS,” the minister informed. He said the proposal is being considered by the Department of Telecommunication at present.

VRS or voluntary retirement scheme for MTNL has been doing the rounds for years now. Many expert panels were formed in the past, comprising of parliamentarians, academia and management gurus, to devise a revival plan for the PSU that has been making losses for nearly a decade now. Cutting down on wage bill was the top most priority suggested by all the past panels.

MTNL has close to 40,000 employees with only two telecom circles to do business. In comparison, Bharti Airtel, India’s largest telco, operates in all 22 telecom circles and has little over 20,000 employees. MTNL’s expense towards its employees is in excess of 90% of its revenues as compared to 5 to 6% for private operators.

By end of December 2017, MTNL was sitting at a debt of nearly Rs 17,000 crore. In the quarter ended December 31, 2017, the PSU earned 
revenues of Rs 580 crore and made a loss of Rs 639 crore. In the previous quarter, too, the firm made loss of Rs 730 crore to a revenue of Rs 642 crore.

With this sort of performance, it has become imperative for MTNL to downsize its worforce, and the firm feels VRS is one of the fastest way to achieve a part of that target.