Tata Motors Cuts Up To 1500 Employees As Part Of Restructuring Exercise
Sameer Contractor
1 min read
May 24, 2017, 07:47 AM
Key Highlights
- Tata said it has cut up to 10-12% employees from its managerial level
- The restructuring exercise was initiated to bring more accountability
- Tata Motors reported a lower consolidated revenue for FY2017
Having announced Voluntary Retirement Scheme or VRS for its employees recently, Tata Motors said that it has reduced its managerial workforce domestically by 10-12 per cent as part of an organisational restructuring exercise. The Indian automaker declared its financial results for the fourth quarter of 2016-17 and that's where the company Managing Director and CEO Gunter Butschek spoke about the reduction in workforce.
Speaking at the event, Butschek said, "The reference on which we started was in the vicinity of 13,000. We do see as far as the white collar population is concerned, an overall reduction in the vicinity of 10-12 per cent." The 10-12 per cent workforce equates to around 1500 people out of the total 13,000. Tata also clarified that only the white collared personnel were affected by the VRS, and the blue collared workers have not been impacted by the exercise.
Tata Motors also revealed that the affected employees were given the option of voluntary retirement, while some retired or resigned. Certain employees were also moved to new roles within the company and the others were transferred to the company's services arm - Global Delivery Centre (GDC), something we told you about earlier this year. The latter works on a contractual basis for the automaker and does not bring the employees on Tata's payroll. The number of employees transferred to GDC wasn't though.
Gunter Butschek further said that the past year was about getting the strategic direction right. The company identified the possibilities of restructuring and that started with the aim to reduce managerial levels. From the previous 14 levels, the automaker is now operating on five core levels, along with the executive directors, presidents and Managing Director. The move was seen as an effort to increase accountability in an organisation as big as Tata Motors, especially with the automaker reporting lower net profit.
For the fourth quarter of the 2016-17 financial year, Tata Motors reported a lower consolidated net profit of Rs. 4336 crore, downy by 17 per cent as compared to Rs. 5211 crore reported in the previous fiscal. For the year ended March 31, 2017, the Consolidated revenue (net of excise) was Rs. 269,850 crores against Rs. 273,111 crores for the last year. The manufacturer reported a net profit of Rs. 7557 crore, a drop of 35 per cent of the previous year.
Meanwhile, Tata's British brand Jaguar Land Rover reported a 13 per cent increase in sales and 10 per cent hike in revenue. In standalone business, the M&HCV and LCV showed de-growth last year in the commercial vehicle space, while the passengeer vehicle segment was able to show some growth backed by three launches - Tiago, Hexa and Tigor.
Speaking at the event, Butschek said, "The reference on which we started was in the vicinity of 13,000. We do see as far as the white collar population is concerned, an overall reduction in the vicinity of 10-12 per cent." The 10-12 per cent workforce equates to around 1500 people out of the total 13,000. Tata also clarified that only the white collared personnel were affected by the VRS, and the blue collared workers have not been impacted by the exercise.
Tata Motors also revealed that the affected employees were given the option of voluntary retirement, while some retired or resigned. Certain employees were also moved to new roles within the company and the others were transferred to the company's services arm - Global Delivery Centre (GDC), something we told you about earlier this year. The latter works on a contractual basis for the automaker and does not bring the employees on Tata's payroll. The number of employees transferred to GDC wasn't though.
Tata's passenger vehicle segment grew last year backed by three new launches
For the fourth quarter of the 2016-17 financial year, Tata Motors reported a lower consolidated net profit of Rs. 4336 crore, downy by 17 per cent as compared to Rs. 5211 crore reported in the previous fiscal. For the year ended March 31, 2017, the Consolidated revenue (net of excise) was Rs. 269,850 crores against Rs. 273,111 crores for the last year. The manufacturer reported a net profit of Rs. 7557 crore, a drop of 35 per cent of the previous year.
Meanwhile, Tata's British brand Jaguar Land Rover reported a 13 per cent increase in sales and 10 per cent hike in revenue. In standalone business, the M&HCV and LCV showed de-growth last year in the commercial vehicle space, while the passengeer vehicle segment was able to show some growth backed by three launches - Tiago, Hexa and Tigor.
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