Tata Motors To Offer VRS Package To Management

Tata Motors is cutting down its white-collar workforce by initiating a VRS package which will be offered to as many as 300-500 executives according to a news channel. That is a number the company denies at present, since all those involved will not retire. Some will be moved as part of the new management structure. The company is planning to relocate part of its mid-level executives to its Global Development Centre (GDC) in Pune.

Tata says, "As part of the restructuring, we have also identified roles, which are best located in a central, common service structure, providing service across the company through optimised and efficient processes. To facilitate this, number of roles distributed currently across the company are being relocated in the GDC. We expect significant benefits in cost, service quality and process efficiencies."

The VRS package has been approved by the board and the company says that it's part of a larger endeavour to cut costs and make overall operations more streamlined. This is the 3rd VRS package being offered by Tata Motors since 2015 and it will be effective from April 1, 2017. It is likely to include a one-year salary with medical benefits. Offering VRS to its employees will see the company incurring a one-time cost but it will help it in improving its margins in the long term.

A formal announcement will be made soon by the company's leadership and it will report the same to the stock markets too. This also comes at a time when Tata Motors has been changing gears to keep up with the ongoing trend in the industry - to offer a variety of products while enhancing production synergies and efficiencies/ It intends to use modular platforms and cut costs on that front in the future, which is why you see it expanding its horizon by introducing the sub-brand Tamo, and also announcing a likely partnership with the Volkswagen Group.