GlaxoSmithKline Pharmaceuticals, the merged entity will have to spend around Rs 75.28 crore towards voluntary retirement scheme (VRS) for 622 employees at its Worli factory. This has been informed by the company to the Bombay Stock Exchange (BSE).

The company has around 695 employees at its Worli unit. The workers are split between the factory which has 540, while the rest are employed in the office. The VRS is part of Glaxo's initiatives to rationalise manufacturing operations, especially at its Worli plant - a high-cost centre. Though the Glaxo group has eight manufacturing units in the country, the VRS is applicable only for employees at its Worli unit.

According to analysts, the VRS has attracted a good response. Employees who have applied on or before August 21 are entitled to a hospitalisation insurance benefit for themselves and their next of kin. The company has offered to pay the premia on a hospitalisation benefit scheme that will be valid for 20 years or the age of 60, whichever is earlier. It will offer a cover of up to Rs 1 lakh per annum to the employee, his or her spouse and two dependent children.

The company's VRS offers basic and dearness allowance for the remaining service or Rs 5 lakh, whichever is lower. The company also plans to offer a fully taxable ex-gratia payment to its employees. This amount would be a maximum of Rs 7.5 lakh for a service of less than ten years, Rs 8.35 lakh for 10-25 years and Rs 7.5 lakh for over 25 years of service.

Following the amalgamation of Smithkline Beecham Pharmaceuticals India (SBPIL) with Glaxo India (GIL), the name of the latter was changed to GlaxoSmithKline Pharmaceuticals (GPL) with effect from 8 October 2001.As per the scheme, one equity share of Rs 10 each of Glaxo India (GIL), will be allotted for every two existing equity shares of Rs 10 each of SBPIL. British drug firm GlaxoSmithKline owns 51 per cent of GIL and 40 per cent of SBPIL. The Indian merger follows the international merger of GlaxoWellcome and SmithKline Beecham to create GlaxoSmithKline last year.

The new Rs 1,200-crore entity after the merger, GPL, will be a market leader with a 7 per cent share of the over Rs 14,000-crore domestic formulations market. In terms of market share, the combined entity will help consolidate Glaxo's position at the top. It is already a market leader (together with BurroughsWellcome) with a market share of over 5 per cent.

Currently the Glaxo group (comprising GIL, Burroughs Wellcome and Biddle Sawyer) has about 6,000 employees while SBPIL has about 1,800. The Glaxo group currently has eight manufacturing units in India: GIL has four (Mumbai, Thane, Ankleshwar, Nashik), Burroughs Wellcome has one (Mumbai) and Biddle Sawyer has two (Mumbai) while SBPIL has two units (Bangalore and Mysore).

SBPIL had reported a net profit of Rs 30.47 crore in the year ended 31 December 2000 on a net sales of Rs 323.47 crore. GIL had posted a net profit of Rs 42.53 crore for the quarter ended 30 June 2001 on a total income of Rs 182.79 crore.

On BSE, the GIL scrip closed 2.62 per cent higher at Rs 238.50 on October 10, with a volume of 44,135 shares. Smithkline Pharma is quoted higher at Rs 118.35 compared to Rs 115.55 on the previous day with a volume of 2794.