Anil Ambani group firms save on employee cost

Companies of the Anil Dhirubhai Ambani Group (ADAG) are saving heavily on employee cost. Two of the group’s largest entities, Reliance Communications (RCom) and Reliance Power (R-Power) have shown a decline in staff spends in 2011-12, compared to the year before. Reliance Infrastruc-ture’s spends on this count remained flat.

RCom’s employee cost declined by 20.7 per cent to Rs 476 crore for 2011-12, from Rs 601 crore in 2010-11. RInfra, which is into infrastructure project development and construction, had the highest employee cost among the group. It spent Rs 1,028.6 crore, compared to Rs 1,002 crore in the previous year. In the fourth quarter, its employee benefits reduced by 17 per cent, compared to Rs 216.4 crore in the year-ago period.

“People count have reduced,” said Lalit Jalan, chief executive officer, Rinfra, when asked how the company managed to rein in employee cost.

R-Power’s staff cost also was down 22.4 per cent for 2011-12, to about Rs 59.6 crore. In the fourth quarter, the cost showed a 80 per cent decline. According to J P Chalasani, chief executive officer of R-Power, this was because projects were getting commissioned and the staff were being shifted to projects under construction. “The employee costs are being capitalised,” he said.

A top executive of yet another HR consulting firm, who refused to be named, said staff costs are reducing as companies are not stepping-up hiring as attrition remains the same, leading to overall reduction of manpower.

Human resource consultants believe many companies across sectors are cutting employee cost, mostly through reduction in variable pay. The variable component of salaries differ based on the performance of a company, while fixed component remains constant.

Employee cost in some of the group companies, however, had seen the opposite. Reliance Capital’s staff cost increased by 10.2 per cent. Reliance MediaWorks, which houses multiplexes Big Cinemas and the movie post-production business, had also seen the same. (See table).

Reliance Broadcast Networks, the group’s TV channel and radio station vertical, increased its employee benefits expense to Rs 15.8 crore for the March quarter, compared to Rs 15.6 crore in the year-ago period.

Employee restructuring is common across companies busy cost-cutting and optimising production. Future Generali Life had gone in for a massive restructuring since April. Its workforce has reduced by a third and witnessed a closure of 30 per cent in branch network. Similarly, the country’s top private life insurers had scaled down their branches and employees over the past couple of years in a bid to cut cost and increase efficiency.