Hit by slowdown, Tata Motors to offer VRS
23 Jan 2014
Prolonged slowdown has started taking a toll on Indian auto sector.
Hit by sales that were half of what they were in 2011-12, India's auto giant, Tata Motors has decided to offer a voluntary retirement scheme (VRS) to a section of employees as it looked at rationalising costs.
''The VRS allows those people to move on with our support,'' Tata Motors managing director Karl Slym told reporters in New Delhi.
Slym said the number of employees to be offered VRS would be a ''very minor'' number. He was replying to a question on the number of employees who would be offered the option.
''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,'' the Tata Motor MD said addressing a news conference.
Tata Motors is not the only automaker to feel the heat, similar market conditions led Hinduja flagship Ashok Leyland to announce a VRS for its employees during the third quarter.
According to Ashok Leyland managing director Vinod K Dasari, the VRS scheme was aimed at cutting manpower costs and aligning fixed costs to reduced activity levels.
The move at Tata Motors comes as the company sought to cut costs following a record quarterly loss of over Rs800 crore in the July-September period.
The Telegraph newspaper reported a company spokesman from Mumbai as saying VRS would be offered to staff at the administration-level and was not aimed at any particular manufacturing unit.
Last year, the company had cut the number of workers at its Pantnagar plant by 1,200, a 21 per cent cut, which had a workforce of 5,838 at the end of 2012-13.
According to the spokesperson, it had not fixed any target for the offer and that the scheme would be offered to those who wanted to take early retirement.
According to the annual report of the company, it employed 62,716 permanent staff in 2012-13, of which 41,597 were based in India.
Tata Motors operates six plants in the country in Jamshedpur, Pune, Lucknow, Sanand, Dharwad and Pantnagar. The company's sales were down around 42 per cent to 6,537 units last month.
According to Slym, the company would make an investment of Rs3,000 crore in commercial vehicles and passenger vehicles development.
The company's passenger vehicles sales in the nine months ended December 2013 fell to 1,55,571 units, a drop of 37 per cent as against a year earlier.
