Indian conglomerate, Tata Group, for the first time in history is considering a pay cut. The group is mulling over the idea of 15-20 per cent salary cut for senior management amid the impact COVID-19 and its subsequent lockdown.
While the decision was taken at the Tata Sons’ board meeting on 5 June, the holding company of the group will have to get this pay cut decision approved by the individual boards and respective committees, said a source.
“Tata Sons’ senior management will take a 15-20 per cent 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 a source to Livemint.
“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.
The company has initiated cost-cutting measures across all verticals, including marketing, human resources and finance.
Tata Consultancy services (TCS), in its annual report for FY20, said managerial remuneration was decreased by 15 per cent. The annual remuneration of TCS chief executive and managing director Rajesh Gopinathan decreased by 16.5 per cent.
While the company is freezing increments and future hires, TCS is honouring the 30,000-plus campus offers.
Tata Steel is grappling with the impact of lockdown. So, it has requested a government bailout for its European operations. The decision to cut Tata Steel’s pay lies with 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.
It is estimated that the pay cut for Tata Motors, which reported losses of ₹9,894 crore in the March quarter, extensive cost cutting measures and pay cut of 25 per cent will be inevitable, said a source.
