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Madhumathi D.S.

After failing to find takers for its third sell-off bid in July last, it has fixed May 10 as the last day for employees opting for voluntary retirement scheme (VRS) under Karnataka's special PSU package.

BANGALORE, May 6

IT is to be curtains for the State-owned NGEF. The Board for Industrial and Financial Reconstruction (BIFR) has cleared the closure after consultations and the Government and banks have washed their hands off the erstwhile electrical equipment major, its Managing Director, Mr V. Govindaraj, said. The final notice is awaited, he added.

The company was slated for closure or privatisation in January this year under the State's PSU restructuring process. After failing to find takers for its third sell-off bid in July last, it has fixed May 10 as the last day for employees opting for voluntary retirement scheme (VRS) under Karnataka's special PSU package.

As a last chance to its employees, the management has kept the VRS option open till May 10. Beyond that, the staffs stand to lose out heavily on the special Karnataka package of up to Rs 5 lakh and the ID Act will apply, Mr Govindaraj said.

Some 600 employees of the switchgear and the power electronics divisions have been identified for retrenchment. Meanwhile, the employees' demand for 10 per cent additional ex-gratia incentive has been forwarded to the authorities, he said.

The staff strength has come down from around 7,000 to 2,400. The company did not succeed in reducing this to a more manageable 1,500 at the time of its liberal sell-off bid last year. Some 750 employees opted for VRS since May last year.

The company was dogged by consistently low productivity for various reasons, according to Mr Govindaraj. "Even if the staff figure of around 1,500 had been achieved, there was no hope of meeting the target production in spite of our skills and brand image. The order is good even now but our productivity was at most a poor 5-6 lakh per employee turnover per year. This is about half the requisite productivity mark of 10 lakh per employee turnover and a third of what a private sector competitor would turn out.''

Even now, there is a substantial order from KPTCL but he feared that this might have to be surrendered.

The production has been declining since December and output in April was pegged at Rs 3 crore.

It is estimated that 35 per cent of the turnover is being spent on meeting staff costs while the company is running at 50 per cent production.

The State Government has declined to pump in more funds except for financing the ongoing VRS.

Up to March-end, NGEF received Rs 45 crore in two flows and has asked for another Rs 100 crore to settle the remaining staff expenses.

It plans to make a one-time settlement that was to be paid under an earlier VRS to 3,000 former staff.

This scheme was to go on till 2013. A piece of land will be sold to raise Rs 60 crore towards this payment, he said.

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