The management restructuring at Tata Motors comes at a time when the company has been constantly losing market share in the passenger vehicle segment while also seeing competitive pressure in commercial vehicles, where it has enjoyed a lion’s share for decades.
The company reported a 96 per cent decline in profits in the third quarter. Net profit fell to ₹111.57 crore from ₹2,952.67 crore in the year-ago period.
On a standalone basis, Tata Motors’ losses after tax widened to ₹1,046 crore in the quarter from ₹137 crore a year ago.
Tata Motors, last month, was on the front foot with Managing Director and CEO Guenter Butschek emphasising on the need to have a leaner team with a focus on profitable growth, while announcing its strategy to test out new platforms and high-end cars under a sub-brand TAMO.
The company also signed an MoU with Volkswagen Group and Skoda for exploring joint development projects as the company strives hard to regain market-share.
The VRS scheme will cut down several regional roles and integrate several roles into a central unit. “As part of the restructuring, we have also identified roles, which are best located in a central, common service structure, providing service across the company through optimised and efficient processes.
“To facilitate this, a number of roles distributed currently across the company are being relocated in the Global Development Centre (Pune). We expect significant benefits in cost, service quality and process efficiencies,” the company said.
Tata Motors, however, did not provide more details such as the specific functions that will be eligible for VRS and the kind of package they’ll receive under the scheme. It remains to be seen how this move goes down with worker unions across the company’s many plants.