Cummings India has launched a voluntary retirement scheme (VRS) for its employees as a cost-cutting measure.
The scheme is applicable to all professional or exempt employees who have completed a minimum of 10 years in service and are above the age of 45. In an official communication to the exchanges, the Company stated that the scheme was implemented ‘with the objective of reducing the headcount to manage the cost structure based on the business cycles’.
The Company had witnessed a sizeable dip—11 per cent— in its net sales for the third quarter this year. The slowdown in the Indian economy resulting from several factors, including the current liquidity situation, unnecessary delays in infrastructure projects, funding constraints in the banking sector are some of the reasons for the drop in demand. The Company will disclose the financial impact of the VR scheme once it concludes.
Cummings, the diesel and natural gas engine manufacturing company, has joined the list of organisations that are rolling out VRS schemes in order to cut costs. Just last month, telecom major BSNL announced its own VRS scheme, which has found an increasing number of takers over the last few days.
Voluntary retirement schemes are becoming popular mainly because employees realise that they are much older if they wait till the standard or normal retirement age than when they are when the VRS is offered. Retiring early allows them to pursue activities and passions, such as travelling and social work, while they are still physically healthy and sound enough for them. Also, the schemes offered by the companies are rather attractive and lucrative.