Companies spent 20% more on employees last quarter
New Delhi 30-Aug-2010

Public Sector undertakings saw a significant rise in their staff spend in the first quarter this year. Their employee expenditure grew 20.6% during April-June 2010 against a 12.2% dip during April-June 2009.

A three-year study of Q1 staff cost of 55 PSUs (central and states, excluding banks and NBFCs) reveals that the PSUs' expenditure on this count decreased in April-June '09 from Rs 9,435 crore in April-June '08 to Rs 8,283 crore. However, it went up sharply to Rs 9,988 crore during April-June '10.

Sales of these PSUs, too, displayed a similar trend. Their sales turnover decreased by 24.6% to Rs 2.05 lakh crore in Q1FY09, but increased thereafter by 17.6% to Rs 2.42 lakh crore in Q1FY11.

The total expenditure of these PSUs also decreased by 27.7% to Rs 1.76 lakh crore during April-June '09 and increased thereafter by 27.4% to Rs 2.25 lakh crore during April-June'10.

Accordingly, their staff cost-to-total expenditure and staff cost-to-sales increased, respectively, from 3.86% to 4.44% and from 3.46% to 4.12% during the three years from Q1FY09 to Q1FY11.

Among the PSUs, the highest increase in staff cost was seen with Maharashtra Electrosmelt, where it shot up by 132.1% during April-June'10 from a negative 25.6% during April-June'09. This can be explained from its performance. The sales of the company increased from Rs 72.71 crore during April-June '09 to Rs 83.80 crore during April-June '10. The net profit of the company was up 15.8% in the last quarter from a negative of 4.2% a year earlier.

In the case of Madras Fertilisers, staff cost went up by 94.7% during April-June 2010 from a negative of 0.9% during April-June'09. While the company spent Rs 10.77 crore on its staff during April-June'08, the figure rose to Rs 20.77 crore during April-June '10.

Last quarter, SAIL had the highest staff cost of Rs 2,012 crore followed by Bhel at Rs 1,338 crore and IOC at Rs 983 crore. CS Verma, chairman, SAIL, said: "This quarter we had to make an additional provision for performance-related pay for the year 2007-08, 2008-09 and 2009-10. In the year-ago period, this was not reflected as the negotiations were still going on with the employees."

However, in the previous year, during the April-June'09 quarter, Bhel had the highest staff cost of Rs 1,114 crore followed by SAIL at Rs 1,080 crore and IOC at Rs 991 crore. As we have seen, the staff cost-to-total expenditure ratio of PSUs increased during the study period. Among the 55 PSUs, a steady increase in the ratio was seen in the case of 15 PSUs. They include companies in a diverse set of sectors like MTNL, Neyveli Lignite Corporation, ONGC and National Aluminium Company.

The staff cost-to-total expenditure ratio of MTNL steadily rose from 47.06% during April-June'08 to 56.39% during April-June '09 and further increased to 64.48% during April-June'10.

Similarly, a steep downward trend was seen in the case of four PSUs. They include BEML, Engineers India and GMDC. The staff cost-to-total expenditure ratio of Engineers India decreased from 44.84 % to 34.50% and further to 25.74%duringthefirstquartersof the three years under study. Interestingly, nearly 16 PSUs' staff spend dipped during the quarter April-June'10. Significant decline in staff cost during April-June'10 was registered by HPCL, RCF, GSFC, MRPL and PTC India.

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