Slump-hit Tata Motors offers VRS to some staff

Tags: News
Hurt by a prolonged slowdown in the auto market, Tata Motors will offer voluntary retirement to a section of employees as it looks to rationalise costs. Managing director Karl Slym said he was looking to ensure a suitable structure.

“The industry as well as India is going through a rather protracted downturn. Therefore, there are lots of things out there to enable us ensure our structure is suitable. Voluntary retirement scheme (VRS) allows those people to move on with our support,” Slym said at an event in New Delhi. He put the number as “very minor”.

Company sources told this paper that the company was targeting “at least 800 employees from various departments” to offer VRS. They said the company had been laying off white-colour and blue-colour employees at its largest manufacturing facility at Pimpri, near Pune, since last July. “Non-performers were the first casualty,” the sources told Financial Chronicle.

Among those who were given pink slips at Pimpri included a general manager from the production department, an assistant general manager from the production and maintenance department and others.

Facing continuous decline in sales across product categories, the company has also frozen hiring on permanent rolls, which stood at less than about 15,000 in Pune facility.

“Out of the 7,000 temporary workers hired only for five months on rotation, about 3,500 were terminated. Many were told not to come to work even when they had 15-20 days of employment left,” the source said. Production of both passenger cars and commercial vehicles has been cut by 50 per cent due to the slowdown.

The sources said the country’s largest auto maker by revenues and the world’s fifth largest truck manufacturer was forced to reduce the work force to cut cost and reduce inventory across product portfolio in the face of continuous decline in sales. Last year, it had reduced workforce at the Pantnagar plant by over 1,200.

The Mumbai-based company’s total headcount, including temporary staff, stood at 60,000 at the end of September quarter. Its manufacturing bases in India are spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka).

In the September quarter, Hinduja flagship firm Ashok Leyand had offered VRS to its executives. The firm spent Rs 43.58 crore on settlements for those who accepted the offer up to December 31.

In December, domestic car sales declined 4.52 per cent from a year earlier to 1,32,561 units. Tata Motors’ sales fell about 42 per cent to 6,537 units in December. Total sales of commercial vehicles were down 25.53 per cent to 46,757 units. The company’s commercial vehicle sales fell 45.83 per cent to 25,738 units.

The company reported its biggest quarterly loss at over Rs 800 crore in the September quarter. Its standalone revenues (net of excise) for the quarter fell to Rs 8,868 crore compared with Rs 12,481 crore in the corresponding quarter a year ago.

Tata Motors has a product pipeline finalised till 2020. These include hatchbacks, compact sedans, mid-size sedans, compact sports utility vehicles and utility vehicles. It has lined up Rs 3,000 crore investment on product development in FY14. Slym said the spend is a part of the company’s Plan 20-20 and will span commercial vehicles and passenger vehicles.

Slym said a revival in the commercial vehicles market is unlikely in the next 12 months. The CV market is 50 per cent of what it was two years ago and this is the longest downturn the industry has witnessed, he said.

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