The senior ranks at Tata Sons as well as at other Tata group companies, will take a 15-20 percent cut in salary, as part of a cost saving initiative following the COVID-19 pandemic, CNBC-TV18 learns from sources.
Tata Sons is the holding company of the Tata Group.
Sources said that the pay cut would be applicable to employees at Vice President level and above. Also, the cut would be on the base salary for the year FY21 and not on the performance-related component of the salary.
"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;" said a source who did not want to be named.
The pay cut however varies across group companies. At Tata Sons, the pay cut is between 15-20 percent. That's the same for IT major Tata Consultancy Services as well. At Tata Chemicals, Tata Global Beverages , and Indian Hotels the cut is said to be up to 20 percent, and the cut at Tata Steel and Tata Motors could be as high as 25 percent. The cut at Tata Power is said to be between 15-25 percent.
"Tata Sons has been working at cost optimising and creating synergies across the group even before the COVID 19 pandemic. What the pay cuts will do is give them a lever to be able to steer the company through this period. But the pay cuts will be just one of the measures. Cut in travel, reduced operating expenses and monetising costs are being looked at to ensure the pressure on the balance sheet is reduced," said another source aware of the development.
In the earnings call for Q4 (quarter ending March 2020), Rajesh Gopinathan the MD and CEO of TCS had said that the company will focus on saving jobs at the cost of salary cuts.
Tata Sons declined to comment on the story. CNBC TV18 is awaiting comments from the group companies.