With factories running at peak capacity and companies struggling to meet demand, it's probably the best time to be an employee with an automotive company. The better-than-expected turnaround in demand has made automotive and auto parts makers to not only roll back salary cuts but also reward employees with increments.
Senior executives and board members of some companies had adopted voluntary pay cuts during the start of FY21 following depressed market conditions brought on by the Covid-19 pandemic. Auto sales (across all segments) crashed 75 percent during the April-June quarter to close at the lowest level in many years following a strict lockdown.
But a sharp rebound in sales in the July-September quarter (only 1 percent drop against the same quarter last year) saw companies untie their purse strings to reward employees. While some companies stuck to their annual increment cycle with a Covid-induced delay of about a quarter, others have already started with the second round of pay hikes, effective from the upcoming financial year.
India’s second largest carmaker Hyundai Motor India (HMIL) will start its performance appraisal process from February. Sources say the grading process will start shortly, followed by actual increments from April. “There were no salary cuts at HMIL at any level. In fact, everyone got a raise in August,” said one of the sources cited above.
Hyundai’s sales closed 16 percent down in the April-December period but sales between September to December period grew by 10 percent.
Two-wheeler major Bajaj Auto had to delay staff promotions due to the pandemic and adverse market conditions but followed the process nonetheless. Rakesh Sharma, Executive Director, Bajaj Auto, said: “There was no pay cut on account of Covid. Promotions were delayed but done along with the accompanying increments. The bonus and increment cycle is from April 1st, so we will follow that and decide the quantum at that time.”
The increments at Bajaj Auto come in the wake of a 23 percent decline (domestic sales and exports) in volume during the April-December period to 2.8 million units against the same period last year. However, the October-December quarter saw the Pune-based two- and three-wheeler maker post a 9 percent jump in sales to 1.3 million units.
In March, Delhi-based tyremaker JK Tyre announced that its senior management had taken a voluntary pay cut in the range of 15-25 percent. Chairman and Managing director Raghupati Singhania, who had taken a pay cut of 25 percent, said JK Tyre has not only reversed all such salary cuts but made an upward revision in pay packages this month.
“The salary cuts were taken up voluntarily. I am grateful to our team JK Tyre members for their consideration to participate during the adversity. The salary cuts were taken back at different levels at different points of time. As of today, all the salaries are restored. We have decided to go ahead with the annual increments effective January 1, 2021,” Singhania said.
JK Tyre rival Ceat had to hire additional workers to manage the ramp-up in production to meet supply shortages. Therefore, in addition to increments given to employees during the December quarter, the Mumbai-based company had to incur additional costs in new employee wages.
“On a sequential basis, our standalone employee cost went up by Rs 20 crore (during the December quarter), an increase of about 12 percent. This included higher sales and incentive payouts and provisions. We incurred some performance and related incentives and bonuses,” said Anant Goenka, Ceat’s Managing Director.