India Cements is planning to prune its workforce by around 1,000, or 25 per cent of its total staff strength, by the next fiscal year.

The 9-million tonne cement maker is launching a voluntary retirement scheme for its employees.

A senior India Cements executive said the staff reduction process would see a cash outflow of around Rs 50 crore (Rs 500 million).

"The move is in line with our efforts to restructure the company's operations in a way that the overall cost is reduced," he added.

The Chennai-based company currently has over 4,000 employees on its payrolls. The VRS is expected to result in an annual saving of Rs 10 crore (Rs 100 million), sources said.

The company has been ailing, primarily on account of a high debt burden of around Rs 2,000 crore (Rs 20 billion).

The debt pile-up is a result of the aggressive acquisition strategy that India Cements embarked upon 4-5 years back.

It has now put on the block two of its cement units, including Visaka Cements and Raasi Cement.

The company plans to exit some of its non-core operations such as its shipping business and is planning to sell some of its assets, including real estate.

The company reported a net loss of around Rs 201 crore (Rs 2.01 billion) for the year ended March 2003 against a net loss of Rs 0.81 crore (Rs 8.1 million) in the previous year.

India Cements is, however, bullish on its realisations in the current year with cement prices in the south having improved and a sudden surge in demand in the region.

Cement prices in Tamil Nadu have increased to Rs 170 per 50 kg bag level. A pick-up in construction activities in Andhra Pradesh and Karnataka has pushed up prices in these states to around Rs 135 and Rs 155 per bag, respectively.