Updated: August 7, 2020 12:57:29 pm
FROM AVIATION to automobiles, consumer durables to capital goods, and even alcoholic beverages, India Inc’s move to reduce employee costs to withstand the Covid slump had the deepest impact in non-essential manufacturing and services, according to filings of 40 leading BSE 100 companies that have announced their results for the quarter ended June 2020. Among them, the top five Auto to aviation, employee costs take the biggest hit that witnessed the biggest year-on-year drop in aggregate employee expenditure at a consolidated level across corresponding quarters are: Mahindra Finance (36.7%), Havells India (27%), Tata Motors (26%), HDFC Life Insurance (21%) and Maruti Suzuki India (15%. Close behind are InterGlobe Aviation (14.8%), Bajaj Finserv (13%) and United Spirits (12.9%).
InterGlobe Aviation, the parent company of IndiGo, reduced its employee costs by 14.8% during the quarter, compared with the same period last year, while net revenues from operations fell 92% year-on-year during the quarter. Not only did the airline cut salaries and furlough a number of employees, it had to let go 10% (2,700 employees) of its workforce to offset the decline in revenues.
A 38-year old former sales executive with a leading alcoholic beverage company says his employer was in midst of appraisals when the lockdown came into force. “I was among those who were given poor ratings and asked to go. Even for those who managed to retain their jobs, the salaries were cut in the range of 20-30%,” the executive said.
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Companies in labour-dependent sectors, such as manufacturing, industrial goods and real estate, benefitted from the lifting of the lockdown and have even chartered flights to bring workers back. But services establishments continue to struggle, with many opting for hefty salary cuts to save jobs for now.
“We couldn’t pay the staff during the lockdown because there was no work, and we’ve had to cut salaries by 30%. It may even go to 50% if things continue this way. We used to be overbooked and get 100-150 clients a day before the lockdown. Now, it’s a miracle if we get even five. Some of our employees are worried whether they will lose their jobs, but we’ve been trying to stay afloat without letting go of staff,” said Vaishali Raj, who manages a salon in an East Delhi residential suburb.
Restaurants are also red-flagging similar concerns, with staff wanting to come back. For instance, eateries like Wanchai by Kylin that mainly operate in food-courts of malls are bleeding even after the unlockdown because multiplexes and cinema halls, which drive the majority of footfalls, are still shut.
About 90% of staff employed in the brand are from the Northeast and Nepal. During the lockdown, the chain saw around 70% of its staff return to their hometowns. Around half of those who remained were accommodated in rooms above the company’s base kitchen, and delivery kitchens at Chhattarpur in Delhi and Gurugram.
“Those who have started working after the lockdown are getting paid, while those who went home were paid for the days they worked before they left and are now furloughed until they can come back,” said Saurabh Khanijo, managing director of the Kylin chain.
“We are facing a major crunch in labour to get restarted. This is a tsunami kind of situation. It is going to take a lot of time to get everyone back in place and get started, especially with Covid multiplying at a faster pace now…They may take extra time for some of our staff to come back, but we are expecting that they will come back for sure,” he said.
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