Sail's Voluntary Retirement Scheme

The Jolt

In February 2000, the SAIL management received a financial and business-restructuring plan proposed by McKinsey & Co, a leading global management-consulting firm, and approved by the government of India (held 85.82% equity stake). The McKinsey report suggested that SAIL be reorganized into two strategic business units (SBUs) – a flat products company and a long products company. The SAIL management board too was to be restructured, so that it should consisted of two SBU chiefs and directors of finance, HRD, commercial and technical. To increase share value, McKinsey suggested a phased divestment schedule.

The plan envisaged putting the flat products company on the block first, as intense competition was expected in this area, and the long products company at a later date.

Financial restructuring envisaged waiver of Steel Development Fund⁴ (SDF) loans worth Rs 50.73 billion and Rs 3.8 billion lent to IISCO. The government also agreed to provide guarantee for raising loans of Rs 15 billion with a 50% interest subsidy for the amount raised.

This amount had to be utilized for reducing manpower through the voluntary retirement scheme. Another guarantee was given for further raising of Rs 15 billion, for repaying past loans.

Business restructuring proposals included divestment of the following non-core assets:
• Power plants at Rourkela, Durgapur & Bokaro, oxygen plant-2 of the Bhilai steel plant and the fertilizer plant at Rourkela.
• Salem Steel Plant (SSP), Salem.
• Alloy Steel Plant (ASP), Durgapur.
• Visvesvaraya Iron and Steel Plant (VISL), Bhadravati.
• Conversion of IISCO into a joint venture with SAIL having only minority shareholding.

Sail's Voluntary Retirement Scheme - Next Page >>>

4] In 1992, the Steel Development Fund (SDF) was created out of the levies imposed on the Independent Steel Producers (ISPs). The fund was abolished in April 1994.

Case Details

Case Code : HROB002
Themes: HR Practices and Policies
Case Length : 07 Pages
Period : 1999-2001
Organization : SAIL
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Metals & Mining

Free Case Studies

Business Strategy
Finance
HRM
Insurance
IT and Systems
Marketing
Operations
Leadership
More Case Studies >>

Micro Case Studies

Business Environment
Finance
Business Strategy
Human Resource Management
IT and Systems
Marketing
Operations
Micro Case Studies >>

Free Resources

Micro Case Studies
Free Case Studies
Articles
Interviews
Book Reviews
Glossary
Online Quiz
More Free Resources >>

Case Related Links

Best Selling Case Studies
Business Case Studies
Learning With Case Studies
Cases Used in Textbooks
Prize Winning Case Studies
More Case Studies >>

Case Studies and Management Resources