Tata Motors has offered a voluntary retirement plan (VRS) to its employees, a third party in the last five years, to reduce costs and as part of its restructuring plan.
According to the sources, there are a total of around 42,500 employees in the company and, according to the estimate, around half of them are eligible for the VRS. “The plan gives permanent employees and workers the opportunity to benefit from early retirement by obtaining certain compensation and benefits.
“The compensation and benefits offered under VRS are among the best in the industry and include health insurance and guidance on financial and retirement planning,” said Ravindra Kumar GP, Director of Human Resources, in an email to employees. . BusinessLine has seen the letter.
In addition, he said that “all permanent employees are eligible for VRS” and details of the application procedure, benefits and guidelines can be accessed through a link.
“The details of the VRS scheme are being communicated to our colleagues at the parallel plants,” he said, adding that “Tata Motors continues to implement its restructuring plans effectively. In this regard, we are also reviewing our fixed cost structures and At the same time, we ensure that our commitment to the well-being and well-being of employees remains paramount, ”he added.
Confirming the development, a spokesperson said: “Eligible employees and workers can apply for VRS from December 11 to January 9, 2021.”
Tata Motors had previously announced VRS schemes in 2015 and 2017. But many had not opted for the same.
In fact, in 2017, the scheme failed and many employees protested against it. Only 300 employees opted for VRS in the end.
According to analysts who track the industry, Tata Motors is heavily burdened in terms of employee cost compared to many other companies in the industry.
For example, Maruti Suzuki India has around 30,000 employees (regular + contract) in total and manufactures four to five times more vehicles than Tata Motors in the passenger car segment.
Furthermore, Tata Motors spends 8 to 10 percent of its cost on employees, while Maruti Suzuki spends only 2 to 3 percent, thus obtaining better profit margins.