The senior management of Tata group companies may take 15-20% salary cuts as the conglomerate looks at a cost-cutting initiative to tide over the impact of the COVID-19 pandemic on its businesses.
Sources have told LiveMint that the decision has been taken at the Tata Sonsâ€™ board meeting on June 5.
"Tata Sons does not want the pay cuts to impact employees at the mid to junior level and they definitely want to save any impact on jobs. Salary cuts at the top level will not only save a significant amount of capital but will also reduce the impact on junior employees in a lower salary bracket,â€ť a source told CNBC.
Sources have indicated that the salary deduction would be applicable to those at Vice President level and above. Further, the base salary for FY21 would be taken into account for calculating the pay cut and the performance-linked component of the salary would be excluded.
The salary cuts will vary across the group companies. Tata Sons, which is the holding company, as well as IT major Tata Consultancy Services (TCS), are likely to see pay cuts of 15-20%. The cuts at Tata Chemicals, Tata Global Beverages , and Indian Hotels, could be 20% while the cut at Tata Steel and Tata Motors may be as high as 25%. Tata Power may see a pay cut between 15-25%.
All verticals, including marketing, human resources and finance, will see cost-cutting measures, the LiveMint report adds.
N Chandrasekaran, chairman, Tata Sons, had said in a statement, â€śTata Sons is in a strong financial position with adequate cash flows to support the group companies and new growth initiatives. Tata Sons is not looking to monetise its investments to raise capital.â€ť
In its annual report for FY20, TCS had said that managerial compensation was reduced by 15%. TCS chief executive and managing director Rajesh Gopinathanâ€™s annual pay declined 16.5% from 2018-19 to Rs 13.3 crore in 2019-20.