Amara Raja Group, a leading business conglomerate with interests spanning varied verticals, on Wednesday announced pay cuts to its employees at the junior and senior management level in the coming months due to the impact of COVID-19.
The company however, said the reduced amount will be paid back to the employees under 'Business Performance Linked Pay' (BPLP) in the next financial year if the businesses recover and get back to the required levels of performance.
According to the information provided by the group, the total number of employees is around 16,000 and about 20 per cent fall under the pay cut category.
The groups flagship company Amara Raja batteries Limited had 7,541 employees as on March 31, 2019, including employees hired on a temporary basis and the company spent Rs 345.23 crore towards salaries and other benefits, according to the company's annual report last year.
Taking note of the extraordinary circumstances and the uncertainty in the business environment, Amara Raja Group Promoters holding the office of Managing Director in various businesses have voluntarily agreed for up to 50 per cent reduction in their total remuneration for the current fiscal, a press release from the group said.
The group also said increments and revisions in compensation for the current financial year are being deferred for all categories of employees.
"Regarding the staff and management employees, it has been decided to restructure the existing CTC by bringing in a graded reduction of 10 per cent to 25 per cent.
This will be applicable for the junior and senior levels and the reduced amount will be reconstituted as 'Business Performance Linked Pay' (BPLP) in the compensation structure for the balance ten months of FY2020-21," it said.
Due to the repeated lockdown extensions and extremely calibrated reopening of businesses, the fallout of migrant labour challenges, extra precautions and social distancing norms now emerging as the new normal, the Group expects demand contraction in specific customer segments, market volatility and resultant uncertainty in the months ahead, it said.
"The announcement of an innovative Business Performance-linked Pay scheme is a measure of creating a winning proposition for both our People and Businesses.
The scheme aims at rewarding employees in the next financial year if the businesses recover and get back to the required levels of performance, Amara Raja sources told PTI.
While the organisations in the Group are hopeful the economy will rebound sooner than later, the Management is constrained to take all possible measures in keeping the liabilities low, it added.
Jaikrishna B, President (Group HR) Amara Raja Group, said the BPLP scheme is a measure of creating a winning proposition for both People and Businesses.