New Delhi: Those looking to earn INR 5 lakh extra then the offer from Honda is quite tempting. This is part of the voluntary retirement scheme or VRS the fully owned two wheeler subsidiary of Honda Motor company has offered to its associates to exit the company.
Indian automakers are looking at opportunities to prune their workforce and Honda Motorcycle and Scooter India or HMSI, is the latest to join the bandwagon. It has initiated a VRS on January 5 to most of its permanent associates (except Directors) and the early bird ones get Rs 5-lakh extra as an incentive to take the non-binding offer.
“The scheme will be applicable to all permanent associates who are on the roll of the Company on the date of launch of this scheme and completing 10 years of service or attaining the age of 40 years or above on or before 31.01.2021. Directors are not eligible under this scheme…..,” documents assessed by ETAuto shows.
This comes at a time when major players like Tata Motors, Ashok Leyland, Honda Car, HeroMoto Corp, Yamaha Motor amongst others, have come out with various VRS options to prune the workforce that possibly has curtailed the growth of Indian automobile industry.
The company aims to axe more 400 employees in the January VRS and also looking at an formidable golden handshake.~
However the HMSI comes at a time when the company claims that its sales are on the upsurge and December has witnessed a 5 percent growth in sales. In a press release issued on January 4; incidentally a day before it rolled out the VRS, the company release says, “Powered by positive sales traction for 5th straight month & festive buying, Honda’s domestic sales grew 5% to 242,046 units in the year 2020’s last month compared to 230,197 units a year ago…..” This might be a farce for the many of its employees facing imminent or forced exit.
The company aims to axe more 400 employees in the January VRS and also looking at an formidable golden handshake where the top employees could get up to INR 72 lakh in the payout, while junior staffers could be in the range of INR 61-37 lakh.
Besides, “……….In addition to the above dues the eligible associate will also be paid the separation month’s earned salary, earned leave, gratuity and other legal dues as per the rules.”
What comes as a complete shock is the way HMSI has issued the circular where the company issues its December sales jist where it claimed ….Noteworthy, that the third quarter of FY’2020-21 ushered in new hope and positivity. While the first quarter put business on pause mode, the second quarter was about stabilizing the ecosystem and meeting the pent-up demand.
The October – December quarter stood out as the first Quarter of positive YoY sales for Honda. Honda’s Q3 domestic sales jumped 5% on YoY basis to 11,49,101 units in Q3, FY’ 21 from 10,91,299 units in the same period last year….” totally belies the current situation.
A detailed questionnaire to the company remained unanswered till the time of uploading the story and its response would be taken as and when HMSI replies.
Also, the current situation portrays the crisis in the Indian two wheeler industry, which has been losing traction and affecting sales in the past few weeks. While the layoffs have been common in the component makers and other suppliers, off late the decision of the bigger OEMs is portraying the impact of pandemic on the economy.
Now, it seems the job loses and the ongoing pandemic is impacting the lower strata of the society and the evolving nature of the employment like ‘Work From Home’ is restricting the mobility needs of the people, where the demand for personal transportation is coming down.
HMSI is the second largest two-wheeler in India and has initiated the one-sided procedure where the employees cannot withdraw their applications under any ground from the ‘Human Resource’ department.
The company will deduct all the eligible taxes from the total sum of the amount disbursed to the employees and will be looking at pruning its workforce before the end of the financial year. However the company is facing huge glut in stock and had reportedly gone for an emergency closure of its plant in December.
Automobile industry veterans say, the VRS scenario portrays the grim scenario of the economy where the lower strata of the sociological order and the job losses has fractured the customer base of the two-wheeler industry.
“There is not enough customer base in these pandemic times where the bike and scooter maker can expand. The layoffs come after weak festive sales that did not seed any expected up-hike in the two wheeler sales and is forcing OEM to rationalise their workforce. Also the massive price hike originating from tighter BS-6 emission from the earlier BS-4 hike the challenges of the industry,” a senior industry executive said.
Besides this the stricter ‘Credit Control’ coming from banks and financial institutions is also affecting the purchase and demand cycles of the industry. The pandemic has only aggravated the situation which is now affecting demand and sales.
This is quite a contract to the fact that the elder siblings, the four-wheeler players like the Nissan Motor India are going for recruitment and expanding its production line by hiring 1500 workers at its Chennai plant, while a major player like HMSI is retrenching its workforce.
It shows that the effects of the pandemic are visible down the line. HMSI is another one to fall in line where it aims to cut a major portion of its workforce and prune its production in-line with the market demand and falling sales. The scheme will automatically close on January 23 for all permanent workmen and company associates. However, management at the discretion and can change the scheme without any prior information or notice or may even extend its time period.