Reliance Industries Ltd has announced that it will reduce the salaries of some of its employees in the hydrocarbon division by 10 per cent in view of the “adverse impact” of the coronavirus pandemic on fuel demand.
The company’s board of directors would forgo 30 per cent to 50 per cent of their salary, and Chairman Mukesh Ambani, India’s richest man, his entire compensation, according to a letter signed by Reliance Industries Executive Director Hital R Meswani.
These pay cuts would apply to the employees in the hydrocarbon division who are earning more than Rs 15 lakh a year. Those earning less than that would not be impacted, the letter clarified.
“The hydrocarbons business has been adversely impacted due to reduction in demand for refined products and petrochemicals.
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This has of course put pressure on our hydrocarbons business necessitating optimisation and cost reduction across all fronts,” said the letter.
The annual cash bonus and performance-linked incentives which are normally paid in the first quarter of a year have also been deferred.
The letter said that the company would “closely monitor the economic and business environment,” and re-evaluate its response to the situation on a continuous basis “to improve the earning capacity” of the business.
Reuters reported it was not immediately clear whether other Reliance divisions were affected, but three sources told the news agency the company’s telecom unit, Reliance Jio Infocomm, did not appear to have been impacted as of Thursday.
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Reliance this week also said it would consider its first rights issue in almost 30 years, part of its broader commitment to eliminating net debt by March 2021. Reliance’s outstanding debt was about $43 billion at the end of last year.
India’s crude processing in March fell 5.7 per cent from a year earlier, its biggest drop since September, as the coronavirus crisis and travel restrictions to curb it hit demand for fuel and forced refineries to cut output.
While Reliance has raised crude processing at its domestic- markets-focussed plant by about 6 per cent it had cut oil refining at its export-focussed plant by 24% in March, from the same month last year.
Facebook this month revealed plans to spend $5.7 billion to buy a 9.99 per cent stake in Reliance’s digital arm.