Is slowdown forcing staff down-sizing, cost-cutting in RIL?

New Delhi, Dec 21 (PTI) Economic slowdown has not spared
even the largest conglomerate in India, Reliance Industries,
which is carrying out major cost cutting measures, including
downsizing of the staff, and has apparently put on hold mega
investment plans.

From retail to SEZs to the USD 6 billion semiconductor
business, investment plans appear to be caught in the web of
the slowdown.

"As a good corporate practice, we constantly examine
cost competitiveness and take appropriate measures regularly.
It is a practice which is undertaken constantly at Reliance,"
a spokesperson for Mukesh Ambani-led RIL group told PTI.

He was responding to a query whether the group was going
ahead with a major restructuring and if it had mandated
consultants like Cummins to recommend human resource remedy
and whether these advisers had made strong recommendations for
cutting the overlapping activities.

Though the spokesperson dismissed the possibility of
restructuring as speculative, sources said that one of major
indicators of the cost-cutting was that RIL had vacated five
floors it had rented in a Connaught Place building and moved
to another office in Okhla, amid speculations that many of the
outsourced employees -- be those for retail or SEZ businesses
-- were shown the door.

Asked if a salary cut of up to 15 per cent was in the
offing for its middle-to-senior level executives, he said the
query was "baseless and speculative" and "we do not wish to
comment on the same".

He also evaded a direct reply to a question whether the
group had cut its workforce, including a majority of the
contractual as also the workers from contractors for various
businesses, by up to 20,000 people so far this year.

However, some of the employees working with the
conglomerate said that the cost-cutting is to the extent that
a department head, who was used to having an army of people,
has been asked to limit his sub-staff strength to just one and
work on a shoe-string budget on cars, petrol, office boys,
travel and entertainment.

Though there is no formal word on the exact staff
downsizing that has taken place or what was the cost of
severance, it is interesting to note that RIL's staff cost
dropped over 10 per cent to Rs 5.88 billion in quarter ending
September, 2008 from Rs 6.51 billion in the previous quarter.

The spokesperson did not reply to a query on what was the
group's staff strength on January 1 and now, thus making it
difficult to calculate the extent of downsizing. The only
thing he, however, said was that "apart from normal attrition,
we are not aware of whether some of top or mid-management RIL
executives across-the-board were being asked to leave."

Interestingly, according to data available on stock
exchanges, RIL's staff cost had increased from Rs 5.76 billion
in the quarter ending March to Rs 6.51 billion in the
subsequent quarter, a period when the slowdown was yet to hit
the economy and the group was visibly going strong on its
retail and SEZ projects.

Asked if RIL had scrapped its semiconductor business
plan and the team concerned has been asked to leave, he said:
"As part of our business expansion, we continue to evaluate
various long term potential business opportunities. As a
matter of policy, we do not comment on any business which is
still in the evaluation stage." PTI BJ
NIK