Tata Motors cutting fat. Offers VRS to workers

Over the past year, Tata Motors has tried to revive its passenger vehicle segment by offering brand new models such as the Zest and Bolt. Additionally, the brand plans to launch two new vehicles in the passenger vehicle segment annually and multiple new products and variants for its commercial vehicles business. However, low consumer demand, a steep rise in competition and a falling market share have made the brand resort to fat trimming measures. According to an official statement, Tata Motors is offering a voluntary retirement scheme (VRS) to its employees, in order to streamline its operations.

The option is being offered across multiple categories of employees, with the main focus being the workmen at Tata's plants in Jamshedpur, Pune, Lucknow, Sanand, Dharwad and Pantnagar. As per the official release, the move is part of the brands' attempt to "enhance the company's competitiveness" in a market that has seen "depressed growth of the commercial vehicle and passenger car businesses."

The VRS scheme includes a monthly pay-out (Basic + Dearness Allowance) that begins at the date of separation and continues till the employee hits the age of 60. This move provides a monthly income provision as opposed to a one time lump sum pay-out. Employees can also avail of a medical insurance cover for a period of 10 years post separation. These are in addition to normal retirement benefits such as PF, gratuity, superannuation, encashment of unavailed leaves, LTA due but not claimed, etc.

The new scheme will help cut expenses, but in order to improve the brand's financial standing, Tata Motors will have to look at serious moves to bolster sales figures. This task has become all the more difficult with the recent budget declaration that was largely indifferent towards car makers.