With the COVID-19 lockdown hitting businesses hard, India’s largest company Reliance Industries has decided to cut the salary of most of its employees by 10 to 50 per cent with its chairman Mukesh Ambani agreeing to forgo all his remuneration.
The oil-to-technology conglomerate has also deferred annual cash bonus and performance-linked incentives that are normally paid in the first quarter, according to an employee communique.
The nationwide lockdown that began on March 25 had led to evaporation of demand as factories shut down, offices closed, air flights suspended, trains stopped and restrictions on the movement of people and goods placed.
Reliances hydrocarbon business was adversely impacted due to a reduction in demand for refined products and petrochemicals. So, the company’s heads wrote to their employees about the salary cut decision.
“This has, of course, put pressure on our hydrocarbons business necessitating optimisation and cost reduction across all fronts,” it said. “The situation demands that we maintain a razor-sharp focus on operating costs and fixed costs and all of us need to contribute to making this happen.”
While Ambani will forgo his entire ₹15 crore compensation, Reliance board of directors including executive directors, Executive Committee (EC) members, and senior leaders will forgo 30 to 50 per cent of their compensation. Ambani’s salary has remained unchanged since 2008-09, forgoing over ₹24 crore per annum.
Employees with compensation of less than ₹15 lakh will have no reduction in compensation but those earning higher could see a 10 per cent reduction in fixed pay. “We will closely monitor the economic and business environment, re-evaluate our response to the situation on a continuous basis and strive to improve the earning capacity of our business,” it said.
The lockdown period, the company communique said, has also provided several opportunities to reorganise and digitalise business processes to generate significant improvements in productivity, efficiency and costs. “Together, we will embrace these opportunities and work towards restoring our compensation levels to normalcy,” it said.
The communication said the firm’s various initiatives on all fronts will help it strengthen the organisation to become more resilient in coping with business uncertainties in a volatile and uncertain world. They will help us navigate through these challenging times with agility and emerge as industry leaders and as accretors of top talent.