Tata Motors plans to offer VRS to 1,600 employees amid slowdown in auto industry

Homegrown auto major Tata Motors is setting the contours of a voluntary retirement scheme (VRS) amid a slowdown in the domestic market.

India's largest vehicle maker is planning to offer this VRS to over 1,600 employees of different departments spanning its passenger as well as commercial vehicle businesses.

"This year, Tata Motors' employee cost-cutting plans are more aggressive than the previous times. Besides removing surplus staff at JLR in recent months, the company is now seeking voluntary retirements from more than 1,600 people across all locations and hierarchies," a source told the Livemint.

Also Read: Tata Motor's JLR retail sales drop 0.7% at 128,953 units in September quarter

Tata's troubles have been exacerbated by strict emission rules that are going to kick in from April 2020 along with having one of the largest manpower in the industry.

This development comes after other auto majors such as Hero MotoCorp Ltd, Toyota Kirloskar Motors Pvt Ltd and Ashok Leyland Ltd also implemented similar schemes this year.

Tata Motors has been trying to bring its employee cost down over the last few years. It had launched a similar offer back in 2017, but several of its employees decided not to avail the severance package.

Also Read: Tata Motors posts standalone loss of Rs 1,282 crore in Q2 on weak India biz, revenue dips 44%

Tata Motor's employee cost as a percentage of its net sales during the September quarter expanded to 10.7% from 5.9% in the year-ago period, the report said.

The auto major reported a standalone net loss of Rs 1,281.97 crore during the second quarter ended September 30, 2019, compared to a net profit of Rs 109.14 crore in the year-ago period.

Its standalone revenue for the quarter also decreased by 44 per cent to Rs 10,000 crore as compared to Rs 17,758.69 crore in the same quarter last year.

Also Read: More than 92,000 employees of BSNL, MTNL opt for VRS scheme