Tata group may cut salaries of senior management by 15-20%2 min read . Updated: 16 Jun 2020, 11:55 PM IST
- The decision, taken at Tata Sons’ meeting on 5 June, will have to be ratified by every group firm’s board
- The appraisal cycles and bonuses for Tata Sons and its group companies may get deferred
MUMBAI : Tata group companies are exploring 15-20% salary cuts for the senior management to tide over the impact of the coronavirus-induced economic slowdown on their businesses.
The decision was taken at the Tata Sons’ board meeting on 5 June, said two people familiar with the matter, requesting anonymity.
While the decision was taken by Tata Sons, the holding company of the salt-to-software conglomerate, it will have to be ratified by individual boards and respective committees, said the first person cited above.
“Tata Sons’ senior management will take 15-20% pay cut. But, as a company, it has a strength of about 200 employees, so the impact will be nominal. The group companies, where the cost-cutting measures are needed and individual companies will have to get this passed through their remuneration committees and boards. The appraisal cycles and bonuses for Tata Sons and group companies may also be deferred. But no job cuts have been envisaged at this point," said the second person.
Cost-cutting measures will be initiated across all verticals, including marketing, human resources and finance. A Tata Sons spokesperson declined to comment on the cost optimization plans.
After the board meeting, Tata Sons had ruled out plans to monetise their assets amid the crisis caused by the pandemic.
“Tata Sons is in a strong financial position with adequate cash flows to support the group companies and new growth initiatives. Tata Sons is not looking to monetise its investments to raise capital," N. Chandrasekaran, chairman, Tata Sons, had said in a statement.
Listed group companies have been highlighting the cost cutting measures such as reduction in employee costs in their results announcements.
Tata Consultancy services (TCS), in its annual report for FY20, said managerial remuneration was decreased by 15%. Annual remuneration of TCS chief executive and managing director Rajesh Gopinathan shrank 16.5% from 2018-19 to ₹13.3 crore in 2019-20.
After its Q4 results, TCS, India’s largest software services exporter, had also said that there will be no increments, besides the freeze on future hires, though it was honouring the 30,000-plus campus offers.
Tata Steel, which has been struggling to maintain production levels during the lockdown, and had sought a government bailout for its European operations, said a decision on pay cuts will be taken by the board’s nominations and remuneration committee. “It, therefore, will not be appropriate to pre-empt a way forward in the matter," said a Tata Steel spokesperson in an emailed response.
Tata Motors, which reported losses of ₹9,894 crore in the March quarter amid a steep decline in vehicles sales will have to resort to extensive cost cutting measures, including a 25% pay cut, said the first person.
While Tata Motors did not mention job losses, its post-production employee cost stands at 11%.
“The company will focus on conserving cash by rigorously managing cost and investment spends to protect liquidity. The company has called out a cost savings programme of ₹1,500 crore and a cash improvement programme of ₹6,000 crore," Tata Motors said in an exchange filing on Monday.
Emailed queries to Tata Motors, Tata Power, Tata Consumers and TCS were not answered till press time.
Romita Majumdar and Tanya Thomas in Mumbai contributed to the story.