New Delhi: Economic slowdown has not spared even the largest conglomerate in India, Reliance Industries, which is carrying out major cost cutting measures, including downsizing of the staff, and has apparently put on hold mega investment plans.
From retail to SEZs to the $6 billion semiconductor business, investment plans appear to be caught in the web of the slowdown.
“As a good corporate practice, we constantly examine cost competitiveness and take appropriate measures regularly. It is a practice which is undertaken constantly at Reliance,” a spokesperson for Mukesh Ambani-led RIL group told the news agency.
He was responding to a query whether the group was going ahead with a major restructuring and if it had mandated consultants like Cummins to recommend human resource remedy and whether these advisers had made strong recommendations for cutting the overlapping activities.
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Though the spokesperson dismissed the possibility of restructuring as speculative, sources said that one of major indicators of the cost-cutting was that RIL had vacated five floors it had rented in a Connaught Place building and moved to another office in Okhla, amid speculations that many of the outsourced employees -- be those for retail or SEZ businesses -- were shown the door.
Asked if a salary cut of up to 15% was in the offing for its middle-to-senior level executives, he said the query was “baseless and speculative” and “we do not wish to comment on the same”.
He also evaded a direct reply to a question whether the group had cut its workforce, including a majority of the contractual as also the workers from contractors for various businesses, by up to 20,000 people so far this year.
However, some of the employees working with the conglomerate said that the cost-cutting is to the extent that a department head, who was used to having an army of people, has been asked to limit his sub-staff strength to just one and work on a shoe-string budget on cars, petrol, office boys, travel and entertainment.
Though there is no formal word on the exact staff downsizing that has taken place or what was the cost of severance, it is interesting to note that RIL’s staff cost dropped over 10% to Rs588 crore in quarter ending September, 2008 from Rs651 crore in the previous quarter.
The spokesperson did not reply to a query on what was the group’s staff strength on 1 January and now, thus making it difficult to calculate the extent of downsizing. The only thing he, however, said was that “apart from normal attrition, we are not aware of whether some of top or mid-management RIL executives across-the-board were being asked to leave.”
Interestingly, according to data available on stock exchanges, RIL’s staff cost had increased from Rs576 crore in the quarter ending March to Rs651 crore in the subsequent quarter, a period when the slowdown was yet to hit the economy and the group was visibly going strong on its retail and SEZ projects.
Asked if RIL had scrapped its semiconductor business plan and the team concerned has been asked to leave, he said: “As part of our business expansion, we continue to evaluate various long term potential business opportunities. As a matter of policy, we do not comment on any business which is still in the evaluation stage.”