Amara Raja Group, the country's leading business conglomerate, on Wednesday announced reduction in annual remuneration for the current financial year 2020-21 in wake of coronavirus pandemic. In an exchange filing, the manufacturer of lead acid batteries said its promoters have voluntarily decided for a 50 per cent reduction in their total remuneration for FY21. While salaries of employees will be reduced in the range of 10-25 per cent, staff in workmen grade and trainees category will be paid the full CTC without reductions.
Besides, the company, which owns Amaron Battery, has also deferred increments and revisions in compensation for all categories of employees for FY21. However, performance appraisal of all employees will be carried out and completed in due course, it said.
Taking note of the extraordinary circumstances and the uncertainty in the business environment, Amara Raja Group promoters holding the office of managing director in various businesses have voluntarily agreed for up to 50 per cent reduction in their total remuneration for FY21, the company said in a filing to the Bombay Stock Exchange.
For staff and management employees, the company has decided to restructure the existing CTC by bringing in a graded reduction of 10 per cent to 25 cent. This will be applicable for the junior and senior levels and the reduced amount will be reconstituted as 'Business Performance Linked Pay' (BPLP) in the compensation structure for the balance ten months of FY21.
"If the business meets satisfactory levels of recovery and performance, the reduced amount will be rewarded back to the employees as BPLP," it said.
The revision in annual remuneration, however, will not be applicable to employees in workmen grade and all category of trainees. They will be paid the full CTC without reductions. Besides, staff employees below a certain threshold salary will also be paid the full CTC and no reductions will be applicable, the company said.
Amara Raja Group of companies with their flagship company Amara Raja Batteries employs a workforce of more than 16,000 people.
Jaikrishna B, President (Group HR), Amara Raja Group, said, "Considering the unprecedented uncertainty, we believe each one of us at the Amara Raja Family must contribute collectively in bouncing back from this adversity. The announcement of an innovative 'Business Performance-linked Pay' scheme is a measure of creating a winning proposition for both our people and businesses."
"The scheme aims at rewarding employees in the next financial year if the businesses recover and get back to the required levels of performance. As always, our motto remains, 'Gotta be a better way'. Thereby, the announcement of this scheme makes it better for everyone," Jaikrishna added.
The company expects demand contraction, market volatility and business uncertainty in the months ahead in wake of the repeated lockdown extensions, fallout of migrant labour, extra precautions and social distancing norms. While the organisations in the group are hopeful the economy will rebound sooner than later, the management is constrained to take all possible measures in keeping the liabilities low, it said.
Additionally, the management is aggressively looking at opportunities for managing overall costs with appropriate austerity measures while enabling the organisation to navigate through these uncertain times, it added.
For the financial year 2019-20, Amara Raja Batteries reported a 37 per cent growth in its net profit at Rs 660.82 crore compared to Rs 483.49 crore in FY19, despite market disruptions towards the year-end due to the COVID-19 induced lockdown restrictions. Revenue for FY20 stood at Rs 6,839.46 crore as compared to Rs 6,793.11 crore during FY19.
For the January-March quarter, the battery manufacturer reported profit after tax (PAT) at Rs 136.65 crore as against Rs 119.34 crore during the same period last year. Revenue stood at Rs 1,581.39 crore as compared to Rs 1,566.73 crore last year.