The Reliance Industries Ltd-owned Indian Petrochemicals Corporation Ltd has shed its workforce by about 12 per cent as it gave voluntary retirement to 1,550 employees, which would cost the company Rs 120 crore (Rs 1.20 billion) during the current fiscal.

The voluntary retirement scheme was offered to the employees on medical ground and formed part of the efforts to improve the efficiency and cut cost, company sources said in New Delhi on Tuesday.

After the VRS, workforce at IPCL has been reduced from 13,150 to 11,600 "without any loss of productivity", they said.

The VRS benefit included ex-gratia equivalent to two months salary for each completed year of service or two months salary for the number of months left, whichever is less.

The execution of VRS would mean that the company's profits would be lower by Rs 120 crore (Rs 1.20 billion) in accordance with the new accounting guidelines, sources said.

IPCL had posted a net profit of Rs 204 crore (Rs 2.04 billion) on a turnover of Rs 9,921 crore (Rs 99.21 billion) in 2002-03.

As per the guidelines, VRS expenses have to be booked in the year in which VRS is given.

RIL had in June 2002 acquired the government's 26 per cent stake in IPCL for about Rs 1,490 crore (Rs 14.90 billion). Subsequently, it made a successful open offer to acquire an additional 20 per cent from the market.

IPCL had, a week ago, announced a one-time voluntary retirement scheme for all its employees, which was available if the employee had medical/health reasons to seek retirement.

The scheme was offered to all the employees completing 10 years of service or 40 years of age.