Hurt by a prolonged slowdown in the auto industry, Tata Motors is planning to offer a voluntary retirement scheme (VRS) to a section of employees as it looks at rationalising costs.
The company, which on Wednesday announced a truck racing series for the first time in India to be held in March, also said it is investing Rs 3,000 crore on product development in the next financial year.
“India is going through a rather protracted downturn. Therefore, there are lots of things out there to enable us, ensure our structure is suitable. Voluntary retirement scheme (VRS) allows those people to move on with our support,” Tata Motors managing director Karl Slym said.
Asked how many employees would be offered the VRS, he said it would be a “very minor” number.
In December, domestic car sales declined 4.52% from a year earlier to 1,32,561 units. Tata Motors' sales fell about 42% to 6,537 units last month.
Total sales of commercial vehicles were down 25.53% to 46,757 units. The company's commercial vehicle sales dropped 45.83% to 25,738 units.
Hit by a prolonged slump in sales, Hinduja flagship firm Ashok Leyand had offered a VRS to its executives during the third quarter. It spent Rs 43.58 crore on settlements for those who accepted the offer up to December 31.
On plans for product development, Slym said the company is spending Rs 3,000 crore in FY14. This is a part of the company's ‘Plan 2020’ and will span commercial vehicles and passenger vehicles, he added.
Stating that the company plans to make newer technologies available, he said the T1 Prima Truck Racing Championship will serve as a "laboratory" for developing new products.
"We have worked on this for eight months...we want to use this platform, not only for us but also for our partners to use the platform to develop new technologies for our trucking business," he said.
The race will be held on March 22-23 at the Buddh International Circuit at Greater Noida.
Slym said a revival in the commercial vehicles market is unlikely in the next 12 months.