The Telegraph
Since 1st March, 1999
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Axe hangs on Maruti mid-level executives

New Delhi, Sept. 22: Maruti Udyog Ltd, the country’s largest automaker, has cobbled an early retirement plan targeting mid-level executives that will cost the company close to Rs 100 crore.

Sources said the Voluntary Retirement Scheme (VRS) — to be offered in two phases in the current fiscal (2003-04) — will be applicable to executives who have completed 10 years of service or are more than 40 years old.

The carmaker, a unit of Japan’s Suzuki Motor Corp, had offered a voluntary retirement plan in October 2001, for which 1,050 employees or 19 per cent of its total workforce had opted.

“Maruti’s target is around 1,000 executives who are likely to opt for this VRS,” sources said adding the company had spent Rs 73.6 crore in the previous retirement scheme but which helped improve productivity.

As of March this year, the carmaker had 4,590 employees which includes 614 engineers, 84 business graduates and 24 chartered accountants.

Maruti, which has its factory located on the outskirts of the city, is facing fierce competition over the past five years from Hyundai, Tata Motors and Ford.

Although it still dominates the market, helped by booming sales of its 800 cc model, Maruti Udyog plans to cut production costs by half over the next three years to boost profits and fight competition.

Three years ago, the company sank to its first-ever loss in its 20-year history owing to rising costs and falling sales. But it rebounded to post a profit the following year helped by sharp cost cuts and productivity gains.

“The VRS is part of the measure to improve efficiency since it would lower production costs which, in turn, would improve competitiveness,” sources said.

The firm, which makes 10 models in India and imports one fully built vehicle, had sold 1,77,925 units in the first five months of this year, up 40.6 per cent helped by a production tax cut and falling interest rates.

Last year, it had sold 3,62,253 units, up 2.9 per cent from the previous period.

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