Tata Motors to offer VRS to 1,600 employees amidst slowdown
The slowdown of Indian automobile industry is not showing any good signs of revival. According to reports, Tata Motors Ltd is working on a voluntary retirement scheme (VRS).
According to people aware of the matters it is informed that “This year, Tata Motors’ employee cost-cutting plans are more aggressive than the previous times. Besides removing surplus staff at JLR in recent months, the company is now seeking voluntary retirements from more than 1,600 people across all locations and hierarchies.”
The scheme will be offered to employees of different departments, across its businesses of passenger and commercial vehicles, said one of the four people cited above, requesting anonymity.
Earlier, other automobile companies in India such as Hero MotoCorp Ltd, Ashok Leyland Ltd and Toyota Kirloskar Motors Pvt. had introduced similar schemes this fiscal.
Tata Motor’s employee cost as a percentage of net sales during the September quarter swelled to 10.7 percent from 5.9 percent in the year earlier. During the quarter, Tata Motors’ stand-alone net sales fell 44 percent from a year earlier, while it plunged to a net loss of ₹1,281.97 crore from a year-earlier profit of ₹109.14 crore.
In comparison, employee cost as a percentage of net sales at the country’s largest passenger vehicle manufacturer, Maruti Suzuki India Ltd, stood at 4.9 percent, compared to 3.5 percent in the year-ago period.
Tata Motors has been trying to reduce its employee cost over the last few years and in 2017 had launched a similar offer, but most of the permanent employees stayed away from the severance package.
According to the person aware of the matters shared with media that permanent employees across departments will be considered for VRS, but the focus will be on reducing the number of employees on the engineering side of operations. Contracts of some senior employees, retained as consultants post retirement, may not get renewed, said the person.