Honda Motorcycle announces VRS for its employees

Yesterday, Honda Motorcycle and Scooters India (HMSI) introduced a voluntary retirement scheme (VRS) for its employees as it seeks to realign its production strategy and improve overall efficiency in these uncertain times, the company said in an internal circular to its employees. The scheme would be applicable to all employees above the age of 40 or who have completed 10 years in the company.

“In order to maintain existence in this competitive two-wheeler market, it is essential to continue with high efficiency and competitiveness. Therefore, keeping in view all the above reasons, the management has introduced a ‘VRS’ for all the associates who want to retire voluntarily from the company before their fixed retirement age, so that they can be relieved from the company gracefully,” Naveen Sharma, Division Head - General Affairs, HMSI, said.

The formula for the VRS package includes three months gross salary into completed year of service, one month’s basic plus Variable Dearness Allowance (VDA) into remaining year of service — and ex-gratia of Rs 22,000 into completed year of service. The scheme also has an ‘early bird incentive’ of Rs 5 lakh each for the first 400 accepted applicants. If the VRS application exceeds 400, additional Rs 4 lakh will be paid to all the applicants, the letter said.

The development at HMSI, India’s second largest two-wheeler manufacturer comes a fortnight after Honda’s car manufacturing arm, Honda Cars India announced re-aligning its production. As part of the move, it has consolidated the manufacturing operations for vehicles and components at its Tapukara plant in Rajasthan for all domestic sales and exports, it said in December.

With a combined annual capacity of 6.4 million units HMSI has production facilities at Manesar (Haryana), Alwar (Rajasthan), Narsapura(Karnataka) and Vithalapur (Gujarat).

The scheme will be effective from January 5 and will remain open till 23rd of this month. However, the management at its discretion can change the scheme without prior information or notice and may extend its time period, it is understood.

The company has also capped the maximum amount for applicants for permanent workmen and Junior Engineer (JE) and above. For instance, for senior manager or vice-president, it has capped at Rs 72 lakh, for manager
Rs 67 lakh, for deputy manager Rs 48 lakh and Rs 15 lakh for an assistant executive.