In a major restructuring move, homegrown auto major Mahindra & Mahindra has fired around 300 management executives since the start of this calendar year as the slowdown in the domestic automotive industry exacerbated, with the pandemic taking its toll.
The automotive division of Mahindra, which suffered the brunt of the layoffs, has suffered a debilitating 27.52 per cent decline in sales in this fiscal so far. Industry volumes have shrunk by 13.2 per cent.
Highly placed sources told BusinessToday.In that the exit of many senior management executives, including VS Parthasarthy, who was President of Mahindra's mobility services sector and member of the group executive board, are part of the nearly 300 executives that have been eased out by the firm since January. Other senior level executives included Prahlada Rao, who was head of business planning at Mahindra.
"Transformational and future-ready work is underway within the company. We have taken up initiatives for simplifying the organisation for greater agility, higher productivity and accelerated growth," says Rajeshwar Tripathi, CHRO, Automotive and Farm Sector, M&M Ltd. "These initiatives have been carried out in an associate-friendly manner. There have been some redundancies, but in almost all cases we offered alternate positions across the organisation. In a handful of cases we had to take the difficult decision to separate."
"This is nothing short of a bloodbath that is unheard of in the group even in the days following the global recession of 2008," says a senior Mahindra executive. "Since the start of the year, nearly 300 executives have been fired. It is brutal. The morale is really low."
"Parthasarthy was an old hand at Mahindra. The way he has been shunted out is unthinkable. This is not the Mahindra of old, " the executive added.
The company added that workers at its factories that are largely unionised have not been touched. Nor has there been any salary revision even for the top level in the management.
"There have been no separations in the workmen category. There has been no rationalisation or salary cuts at any level. Even in 2020, a difficult year because of the pandemic, we announced salary increases at all levels and paid out full performance pay," Tripathi added. "As you are aware, the Mahindra Group has a robust talent management process. Nurturing and growing internal talent is extremely motivating and inspiring for associates. We believe that our strategy of transitioning internal talent into key positions continues to serve us well."
Besides the layoffs though, a proper restructuring is also underway. Executives are being shunted around as a precursor to being sidelined and potentially fired.
"For now, it is only restricted to Mahindra Auto and farm division but there is clear indication that it will spread to Mahindra Research Valley," said another executive. "The feeling is the first to go will be those that worked on projects with Ssangyong and Ford."
Mahindra is actively looking for a buyer for Ssangyong, a South Korean company it acquired in 2011 but failed to turn around. An ill fated attempt at a joint venture partnership with Ford Motor Corporation of the US also came to a naught recently.