The salary and wage bill of small-sized listed companies —those not among the top 200 in net sales —was down 10.3 per cent year-on-year (Y-o-Y) during April-September while their net sales fell 25.3 per cent during the period.
As a result, the salary and wage bill of the smaller firms was at a nine-quarter low in July-September while net sales were the lowest in 12 quarters, except April-June 2020-21 in both cases. In comparison, the salary and wage bill of the top 100 companies was up 0.6 per cent Y-o-Y during H1FY21 (the first half of 2020-21) while their net sales were down just 13 per cent Y-o-Y during the period.
The next 100 companies (in terms of net sales) reported a 2.3 per cent Y-o-Y decline in their salary and wage bill during the first half of the financial year while their net sales were down 18.4 per cent during the period. (See the adjoining chart.)
The analysis is based on the quarterly results of 2,353 listed companies in sectors excluding banks, non-banking financial companies including insurance, and oil and gas firms. This suggests that the smaller ones have been more aggressive in rationalising their staff costs either by way of shedding employees, salary cuts, or both.
“The data shows that small firms have cut staff costs much more than large firms,” wrote Pranjul Bhandari and Aayushi Chaudhary of HSBC Securities and Capital Markets (India) in their latest report.
Teamlease co-founder and Executive Vice President Rituparna Chakroborty said: “Micro, small, and medium enterprises were the first to cut salaries and then retrench because they were unable to cope with a sudden stoppage in their revenues and cash flows in the first quarter. They do not have deep pockets like bigger companies.”
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