India's largest automaker in terms of revenue, Tata Motors has offered a voluntary retirement scheme (VRS) to its 42,597 employees as part of its turnaround strategy. As per an estimate, around half of the total employees are eligible for the VRS scheme.
The VRS scheme, being offered for the third time in four years, is expected to reduce expenses with regard to fixed cost structures for the company. The VRS scheme was floated on Friday. The company has specified eligibility criteria, under which those who have been with the company for five years or more can apply, The Economic Times reported. The compensation under the VRS scheme will depend upon an employee's age and the number of years with the company. The number of employees who are interested in choosing the VRS scheme would be known in the days ahead.
The company has successfully been implementing its turnaround plan while ensuring commitment towards employee welfare, a Tata Motors spokesperson told the daily, adding that the eligible employees and workers can apply from Dec 11 to January 9.
Before this, the homegrown auto major offered the VRS to over 1,600 employees of different departments spanning its passenger as well as commercial vehicle businesses in November 2019.
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.
Amid a slowdown in the auto industry since 2019, other auto majors such as Hero MotoCorp Ltd, Toyota Kirloskar Motors Pvt Ltd and Ashok Leyland Ltd had implemented similar schemes.
Meanwhile, the company reported a consolidated loss of Rs 314.5 crore for the second quarter ended September 30, 2020, impacted by low demand in the wake of the COVID-19 pandemic. The company had posted a net loss of Rs 216.56 crore in the year-ago period and Rs 8,437.99 crore in the June quarter of the current fiscal.