Hyderabad's PSU mining cos face attrition woes - Quoted on CNBC TV report

The mining industry may have rejoiced when it was opened up to the private sector and foreign investment, but the joy seems to have been short-lived. The public sector mining companies are fighting a fierce battle against attrition.

The good old days are over as far as PSU mining companies are concerned. The government's move to allot mining blocks to the private sector, especially in coal, iron ore and oil, has made life difficult. That's because with a sudden spurt in demand for engineers, and a limited talent pool, these companies are coming face-to-face with a new problem - attrition. Private mining companies are luring employees from PSUs with fat pay packages and better growth opportunities. So State-owned companies are being forced to offer bigger pay packages and better living conditions to employees.
Rana Som, CMD, NMDC said,” The problem is there. India is growing very fast and world is growing too. People are getting opportunities else where but we are also training people and the remuneration in public sector is also going up. But old days will not come back, where people joined and stayed with the organization essentially till their later part of life."

PSU mining companies are tight-lipped about exact attrition levels, but sources say it's as high as 25%. The pressure is not coming from just private Indian companies, multinationals like BHP Billiton, Rio Tinto and Vale are offering over 300% hikes in pay.

For instance, a senior level engineer in a PSU draws close to Rs 6 lakhs per annum. But can net Rs 20-25 lakh from the private sector.

Dipesh Dipu, Prinicipal Consultant - Mining, PwC said, “The mining industry is profitable of late. The part of the profitability can go into salary payments and compensation. When you look at overall government sector, there is a limit on how much they can improve on it."

Not just the senior level, finding entry level talent is also a challenge. There are 12 major feeder institutions, with a capacity of 800 seats. But hardly 60% of these seats get filled every year. But the demand for mine engineers is 10 times the existing capacity.

Experts say it's also getting tougher to attract talent into mining, as youngsters perceive it to be strenuous and lacking in glamour, with the field of operation located in remote, inhospitable regions. And that's a scenario that's not helping PSU mining companies much.

(The video can be accessed at http://news.moneycontrol.com/india/news/business/hyderabads-psu-mining-cos-face-attrition-woes/10/06/356003)