Tata Motors seeks to pare manager jobs amid cost-cutting efforts
MUMBAI (NewsRise) -- Tata Motors plans to let go several senior managers in a bid to cut costs, as the Indian owner of Jaguar Land Rover seeks to revive profit growth at home, one of the fastest growing automotive markets in the world.
The automaker is struggling to make money in India's car market dominated by Maruti Suzuki India, a unit of Japan's Suzuki Motor, and the local unit of South Korea's Hyundai Motors. In the quarter ended in December, Tata's domestic business posted a loss of 10.46 billion rupees ($160 million).
Tata Motors last year unveiled a restructuring plan, including paring down the number of models, as it struggled to keep pace with the fast-changing trends in the market. The company is working on new vehicles and exploring a partnership with Volkswagen as it aims to become one of the top three automobile brands in India by 2019.
"As part of the on-going organization effectiveness project...a proposal on voluntary retirement package has been presented and approved by the board," a spokesman for Tata Motors said Wednesday. The company is finalizing the number of executives to whom the retirement package will be offered, he said without giving further details.
According to CNBC TV18, Tata Motors's retirement package will be offered to 500 executives. It will be effective April 1 and is likely to include one-year salary with medical benefits, the television network said, citing people it didn't identify.
In January 2016, Tata Motors, also India's biggest truck maker, appointed Guenter Butschek, a former Airbus Group executive, as its chief executive and managing director of domestic business to stem its falling sales. Late last year, Butschek unveiled a plan to overhaul operations, including passenger vehicles business, and said the company would phase out some of its unpopular cars.
For long, Tata Motors's profitability has been driven by its luxury car unit Jaguar Land Rover, which it bought from Ford Motor for $2.5 billion in 2008. The marquee brands account for more than half of Tata Motors' revenue and nearly 90% of its operating profit. In the quarter ended in December, Tata Motors suffered a 96% drop in net income.
Tata Motors is currently exploring a partnership with Volkswagen to jointly develop auto components and vehicles in an around the Indian subcontinent. Last week, both the companies signed a memorandum of understanding and said they plan to launch jointly developed products in the Indian market in 2019.
Meanwhile, in a separate statement, Tata Sons, the parent of Tata Motors, said it hired Ankur Verma, a Bank of America Merrill Lynch managing director, to join the new chairman N. Chandrasekaran's office, the first big recruit since the Tata veteran took charge last month.
Shares of Tata Motors gained 0.79%, while that of Maruti ended 0.06% higher in Mumbai trading on Wednesday. The benchmark S&P BSE Sensex lost 0.15%.
--Dhanya Ann Thoppil