Tata Motors to offer VRS to reduce costs, restructuring likely to cut 500 jobs

Tata Motors is working on achieving profitable growth for all of its business units by FY2019. At present, losses of its domestic business has been a drag on the company’s consolidated profit.

PTI March 15, 2017 09:04:24 IST
Tata Motors to offer VRS to reduce costs, restructuring likely to cut 500 jobs

New Delhi: Tata Motors will offer voluntary retirement scheme to trim costs as part of restructuring although the number of employees is still being worked out.

Tata Motors to offer VRS to reduce costs restructuring likely to cut 500 jobs

Reuters

“Tata Motors confirms that as part of the on-going organisation effectiveness project, where we have already finalised the top two levels (L1-L2) of our management structure, a proposal on VRS package has been presented and approved by the board,” a Tata Motors spokesperson said in an emailed statement.

While it has been speculated that the number of employees to be offered VRS could be around 500, the spokesperson declined to confirm saying “it is still in discussion stage”. “Since the exercise for selecting L3-L5 (levels) is still underway, it is premature for us to comment on any other specifics at this point of time,” the spokesperson added.

Elaborating steps taken up by the company for the exercise, the spokesperson said: “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 (Global Delivery Centre). “We expect significant benefits in cost, service quality and process efficiencies,” the spokesperson said.

Tata Motors is working on achieving profitable growth for all of its business units by FY2019. At present, losses of its domestic business has been a drag on the company’s consolidated profit.

In the December quarter, the company reported 96.22 percent decline in consolidated net profit to Rs111.57 crore due to losses in domestic operations and lower profit of its British arm JLR. On a standalone basis, Tata Motors’ net loss widened to Rs1,046 crore in the third quarter of 2016-17, from Rs137 crore a year ago.

In 2015, Tata Motors had also announced a similar VRS scheme to its employees. The Mumbai-based auto major employs around 60,000 employees globally.

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