Mumbai: Tata Group, the country’s largest conglomerate, plans to slash salaries of employees at some of its companies after a slump in revenues as the coronavirus-induced lockdown hurts businesses.
Some of its companies like Indian Hotels (Taj), Tata SIA Airlines (Vistara) and Tata MotorsNSE 8.27 % have been majorly hit after travel bans and production shutdowns of non-essential products. Some other units like Tata PowerNSE -1.40 % and Tata CommunicationsNSE 0.24 % benefited as stay-at-home restrictions increased demand for electricity and internet. Indian Hotels, which owns the Taj Mahal Palace in Mumbai, the country’s first luxury hotel, said its senior leadership will contribute a percentage of their salary this quarter to help with the survival phase of the company. In an email to employees, CEO Puneet Chhatwal said, We will need to continue evaluating this month-on-month and take some tough decisions as the situation evolves.
Chhatwal further said that other financial and operational interventions are being constantly evaluated and implemented, including manning, renegotiation of contracts, deferment of renovations, hiring freeze and other cost-optimisation measures. Grounded carrier Vistara has sent 30% of its 4,000 employees on leave without pay for some days in the April-through-June months to reduce costs. Promoter Tata Sons is planning to infuse more equity into the loss-making Vistara to support its capital requirements. The aviation and hospitality sectors are estimated to see a business loss of over Rs 1 lakh crore this year after the sector came to a standstill due to human mobility restrictions. The Tata Group’s most profitable company, TCS, has frozen salary hikes of its 4.5 lakh employees since it sees revenue contracting in the April-June quarter as customers slash IT spends due to the coronavirus crisis. Sources said more Tata companies could review employee compensations in the coming weeks.
Tata Group joins Reliance Industries, Kotak Mahindra Bank and several other Indian companies in slashing salaries to curb costs in order to offset decreasing earnings and protect cash balances during the economic slump related to the outbreak.