Reliance Industries Ltd has unveiled an initial set of cost-cutting measures for employees in its hydrocarbons business which is reeling under a demand slump in refined products and petrochemicals due to the outbreak of coronavirus and the consequent lockdown.

Effective April 1, Chairman Mukesh Ambani will forgo his entire compensation while the Board of Directors including Executive Directors, Executive Committee members and senior leaders will forgo 30-50 percent of their compensation, according to an internal document seen by BusinessLine.

RIL’s employees across its hydrocarbons business with compensation less than Rs15 lacs per annum will have no reduction in compensation, but employees with compensation in excess of Rs15 lacs will have a ten percent reduction in fixed pay. Annual cash bonus and Performance Linked Incentives normally paid in the first quarter has been deferred, according to the document signed by Hital Meswani, Executive Director and member of the board.

The hydrocarbons business has been adversely impacted due to reduction in demand for refined products and petrochemicals. This has put pressure on our hydrocarbons business necessitating optimisation and cost reduction across all fronts, Meswani wrote in the document.

“Reliance is no stranger to facing adversities and even in the current situation, we have ensured that all our manufacturing sites continue to run at near capacity levels and our supply chains are re-engineered for business continuity,” he said.

“The situation demands that we maintain razor sharp focus on operating costs and fixed costs and all of us need to contribute to make this happen. This challenging time has necessitated us to take some proactive decisions on our people costs as well,” he added.

RIL said it will closely monitor the economic and business environment, re-evaluate its response to the situation on a continuous basis and strive to improve the earning capacity of our business.

The lock down period has also provided us with several opportunities to reorganise ourselves and digitalise our business processes to generate significant improvements in our productivity, efficiency and costs.

“Together we will embrace these opportunities and work towards restoring our compensation levels to normalcy. I firmly believe that our various initiatives on all fronts will help us strengthen our organization to become more resilient in coping with business uncertainties in a volatile and uncertain world,” he added.

Mukesh Ambani to forego his entire salary

The RIL board approved Mukesh Ambani's proposal to forego his entire salary until the impact of Covid-19 abates.

"In light of the COVID-19 outbreak in India, which has exacted a huge toll on the societal, economic and industrial health of the nation, Mukesh Ambani, the Chairman and Managing Director, has voluntarily decided to forego his entire salary. The Chairman had his salary capped at Rs 15 crore since  2008-09  to set a personal example of moderation in managerial compensation levels. And now, he is forgoing his salary until the company and all its businesses are fully back to their earnings potential. The company is taking all necessary measures to optimize costs and mount an effective operational response to Covid-led exigencies," said a company statement.

 

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