Companies

M&M slashes 300 top-level positions in 2 divisions

S Ronendra Singh New Delhi | Updated on April 08, 2021

The main reasons for the layoffs could be the decline in sales over the past many months   -  REUTERS

Exits attributed to decline in sales in Auto and Farm Equipment units

In a major restructuring exercise, Mahindra Group has let off around 300 senior-level executives in the Automotive and Farm Equipment divisions.

Decline in sales over the past many months is perhaps one of the major reasons for the layoff. In the automotive division, sales declined by more than 19 per cent, exceeding the overall industry decline of around 13 per cent (from April 2019 to January 2021).

Sources close to the development told BusinessLine that the process of layoffs, mostly at the senior levels, began in January. However, factory workers are safe and not being laid off, they said.

Top level exits

Sources added the recent exit of VS Parthasarathy, President — Mobility Services Sector and Member of the Group Executive Board, after a stint of 21 years with the Mahindra Group, was also part of the lay-off exercise.

However, the Group, in a stock filing on Monday said, Parthasarathy ‘has decided to leave the Group effective April 1, to pursue personal interests’. Parthasarathy, fondly called ‘Partha’, is best known for his role as the Group CFO from 2013–20. Another person in the senior position Prahalada Rao, Head of Business Planning Automotive Farm Equipment and Agri Business, also had to exit recently as part of the layoff, said the sources. Rao held a crucial position in Mahindra’s South Korean subsidiary SsangYong, which was also a loss-making bet for the Group.

However, when asked about Prahalada Rao’s name, a company spokesperson said his name is not in the lay off list but he is moving out by June.

“There will be more changes from April as new leadership takes over, with Anish Shah as the new Managing Director and Chief Executive Officer of M&M from April 2,” said one of the sources.

Shah takes over from Pawan Goenka, who also served the company for almost three decades.

Pandemic pain

The transition began in January, and Shah may effect more changesat the senior level, the sources said.

“The changes are in the marketing and distribution divisions right now, but may further go down to the R&D and other departments,” said another source privy to the matter. Rajeshwar Tripathi, Chief Human Resources Officer (CHRO), Automotive and Farm Sector, confirmed the developments.

“Transformational and future-ready work is under way within the company. We have taken up initiatives for simplifying the organisation for greater agility, higher productivity and accelerated growth. These initiatives have been carried out in an associate-friendly manner. There have been some redundancies, but in almost all cases we offered alternative positions across the organisation. In a handful of cases, we had to take the difficult decision to separate,” he responded to BusinessLine in a detailed email query .

He said that ‘there have been no separations in the workmen category. There has been no rationalisation or salary cuts at any level. “Even in 2020, a difficult year because of the pandemic, we announced salary hikes at all levels and paid out full performance pay,” Tripathi said.

“The Mahindra Group has a robust Talent Management Process. Nurturing and growing internal talent is extremely motivating and inspiring for associates. We believe that our strategy of transitioning internal talent into key positions continues to serve us well,” he added.

The retrenchment in the automotive sector is not a new thing in the recent past. Companies like Jaguar and Land Rover (part of the Tata Group) also saw some job cuts, and companies such as Honda Cars India and Tata Motors also announced voluntary retirement schemes to cut costs.

Published on March 09, 2021

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