Tata Motors offers VRS to check sliding financials

Last Updated: Thu, Jan 23, 2014 04:47 hrs

After reporting its biggest quarterly loss of Rs 800 crore in the three months ended September, Tata Motors, the country's biggest vehicles maker, is planning to offer a voluntary retirement scheme (VRS) to employees to improve its financials. The VRS would complement its earlier announced investment of  Rs 3,000 crore for developing new commercial and passenger vehicles in the next year.

Though Managing Director Karl Slym did not say how many workers would be offered VRS, he said it would be "very minor". He didn't specify whether the subsequent vacancies would be filled up. A company spokesperson said VRS is and will be offered to "white-collar workers only". Tata Motors employs around 30,000 people.

"The industry as well as India is going through a rather protracted downturn. Therefore, there are a lot of things to enable us and ensure our structure is suitable. VRS allows those people to move on with our support," said Slym.

Tata Motors, with six plants, is among the oldest automobile companies in India. Three of these - in Jamshedpur (Jharkhand), Pune (Maharashtra) and Lucknow (Uttar Pradesh) - were set up before 1992. Those in Sanand (Gujarat), Dharwad (Karnataka) and Pantnagar (Uttarakhand) have been set up in the past six years.

At Sanand, where the Mumbai-based company makes the Nano small car, the average age of workers is between 25 and 30 years, lower than at the Jamshedpur and Pune plants. Last year, the company reduced its workforce at Pantnagar plant, which makes the Ace mini-truck, by 1,200 workers or a fifth of the total.

 Chennai-based commercial vehicle maker Ashok Leyand has also been reported to offer VRS in the December quarter to cut costs.

Sales of Tata Motors passenger vehicles in the nine months ended December fell 37 per cent year-on-year to 155,571 units. Sales of trucks and buses also dropped a by a fourth year-on-year to 243,160 vehicles, show data from the Society of Indian Automobile Manufacturers.

Despite slowing economic growth, the company has no plans of cutting investment in product development. Announcing a first-time truck-racing series in India scheduled in March, Slym said the company would invest Rs 3,000 crore for developing commercial and passenger vehicles as part of its Plan 2020, including hatchbacks, compact sedans, mid-size sedans, compact sports utility vehicles and utility vehicles.

The T1 Prima Truck Racing Championship will be held on March 22-23 at the Buddh International Circuit at Greater Noida in the National Capital Region.

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