Ambani: Austerity drive

Mumbai, Dec. 19: The Mukesh Ambani-led Reliance group of companies is likely to cut 8 to 10 per cent of its workforce over the next two quarters.

Sources said the axe would fall on both direct and indirect employees, basically contract labour.

The $35-billion Mukesh Ambani group has about 44,000 employees on its rolls.

There is no clarity yet about the level of redundancies in the direct employee base. Sources, however, said they were expecting anywhere between 3,500 and 4,500 jobs to be chopped. It is not clear whether the job cuts will impact senior and middle management.

These layoffs, however, would affect employees engaged with the group’s newer businesses of retail, special economic zones (SEZs) and life sciences.

The Reliance group management is learnt to be in the middle of a cost rationalisation exercise. A reduction in wage costs is one of the parameters under consideration.

In response to a questionnaire on these numbers and the businesses that would be hit by this exercise, a Reliance Industries spokesperson said, “As a good corporate practice, we constantly examine our cost competiveness and take appropriate measures regularly. There is no group wide programme on retrenchment and hence any number mentioned in your questionnaire is incorrect.”

There were several unconfirmed reports during the day that the group had put its new business initiatives on hold in order to cope with the worsening economic situation.

Sources said the group had embarked on a serious consolidation exercise in the group’s retail arm to make the business more cost efficient. This exercise will impact the sourcing and finance functions.

A senior official who had been with the retail arm till recently said the exercise began a while ago when the group started terminating third party sourcing contracts. Another source said the redundancies were being implemented on a piece meal basis and not en masse.

In response to a question on a consolidation initiative in the group’s retail arm and a “go slow” directive by the management, the RIL spokesperson said, “Reliance Retail continues to grow according to our expansion plans. In the last quarter, Reliance Retail has added over 80 stores. At present, it has over 800 stores across the country. We have launched new formats, including Reliance Living Homeware, Reliance Home Kitchens and Reliance Living Furnishings. In fact, today we launched another format Reliance Living Furniture in Delhi.”

There have also been some unconfirmed reports of some job cuts at RIL’s Jamnagar refinery but sources said these were not employees on the company’s payroll. These developments clearly indicate that the country’s leading conglomerate is under pressure like the rest of corporate India which is struggling to minimise the impact of the current downturn.