The Mada head office in Dhanbad on Monday. (Gautam Dey)

A cash-strapped Mineral Area Development Authority (Mada) is planning to offload nearly 700 of its 1,600 employees through a voluntary retirement scheme.

In order to pay VRS benefits, the civic outfit is thinking of taking a bank loan with the urban development department as the guarantor. During a meeting with State Bank of India’s assistant general manager Vikash Kumar Jain, Mada managing director Ravindra Singh said they required a loan of nearly Rs 150 crore to execute the restructuring plan.

Singh told The Telegraph that Jain had agreed to coordinate with the Ranchi branch of SBI Cap for formulation of a capital investment scheme for the restructuring programme.

“Although we are yet to receive recommendations of a high-level meeting regarding Mada’s future, which took place in Ranchi on June 18, we are completing our homework to expedite the restructuring plan,” said Singh. He added that while SBI Cap would prepare the main plan, the management studies department of Indian School of Mines Dhanbad would assist them.

Notably, an amalgamation of Mada and Dhanbad Municipal Corporation is being considered because as per Jharkhand Municipality Act, 2011, two civic bodies cannot operate in an area. The June 18 Ranchi meeting was held to discuss the modalities of the amalgamation process.

There are a number of practical hurdles in the execution of the plan.

Firstly, the command area of Mada is much larger than that of Dhanbad Municipal Corporation and while the former employs 1,600 people, the latter has a workforce of only 300. This apart, Mada’s poor financial health is another obstacle for the amalgamation plan.

In order to sort out these problems, the state government constituted a committee last year.

Headed by the development commissioner, the committee is mulling a restructuring plan to make Mada financially self-sustainable.

Notably, MADA’s incomes were badly hit after the state government withdrew various taxes that were the civic outfit’s sources of income. Currently, MADA generates a revenue of Rs 30 crore a month through water tax collection from Jharia, Katras, and Chatabad. The revenue is insufficient to pay salaries of its 1,600 employees. Many employees of the civic outfit have not received regular salaries ever since MADA was hit by funds crunch.