Honda Motorcycle, India's second-biggest two-wheeler maker, announces VRS

Honda Motorcycle and Scooters India (HMSI) introduced a voluntary retirement scheme on Tuesday 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. Employees above the age of 40 or who have completed 10 years in the company are eligible for the scheme.

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 on December. HMSI’s communiqué doesn’t share details on re-alignment.

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

“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 in the circular, a copy of which has been reviewed by 

Business Standard. The Directors of the company are not eligible under this scheme, he wrote.

The scheme will be effective from January 5 and will remain open till January 23. However, the management at its discretion can change the scheme without prior information or notice and may extend its time period, the letter said. The management will have full authority to decide in this regard, it 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 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 at Rs 48 lakh and Rs 15 lakh for assistant executive.