Tata Steel raises managers' pay

Total managerial remuneration up 22%to Rs 12 crore in 2014-15

Tata Steel, the most indebted company in the steel industry across the globe, raised the pay of key managers despite a challenging business environment in 2014-15.

A dwindling top line, high finance costs and a bottom line that moved into the red by the end of the financial year did not stop the steel maker from increasing managerial remuneration by 22 per cent to Rs 12. crore in 2014-15 from Rs 9.9 crore in the previous year.

“Remuneration to Koushik Chatterjee, group executive director (finance and  corporate), during the fiscal has been increased by approximately 11 per cent as compared to the previous financial year,” the company said in its annual report. Chatterjee drew an annual salary of Rs 5.61 crore in the year gone by.

HOW THEY STACK UP

Comparison of the remuneration of the key managerial personnel (KMP) against the performance of the company

• Aggregate remuneration of KMP in FY15 12.71 (Rs cr)
   
• Revenue 41,785 (Rs cr)
   
• Remuneration of KMPs (as % of revenue) 0.03
   
• Profit before tax (PBT) 8,509 (Rs cr)
   
• Remuneration of MPs (as % of PBT) 0.15

Source: Tata Steel annual report

T V Narendran, managing director of Tata Steel (India and Southeast Asia) operations, was inducted on the board with effect from September 19, 2013. Due to this, disclosure of the percentage increase in his salary between 2013-14 and 2014-15 was not made, the report explained.

Among non-executive directors, Karl Koehler, chief executive officer for Tata Steel's Europe operations, was the only one who saw an increase in his remuneration. Koehler’s remuneration for 2014-15 was raised 13.3 per cent from the period last year.

Tata Steel decided to raise the pay of its managers in a year when it wrote down Rs 6,500 crore. The company’s operations in India were affected by regulatory uncertainties in mining and several of its iron ore mines remained shut for varying periods. Supply and production were disrupted affecting the cost structure.

Declining steel demand globally and increased production in China resulted in high exports to Europe, dampening the business climate there. Tata Steel’s operations in Southeast Asia, too, were affected by Chinese exports flooding the market.

Tata Steel said the increase in remuneration was guided by inflation, normal salary revisions, external competitiveness, and talent retention.

"Whilst the company has a strong focus on cost, employee cost being one of the key areas for cost monitoring and control, the results of any structural initiatives need to be measured over a long-term horizon and cannot be strictly compared with annual performance indicators," the company added.

Key managers, however, took home a fraction of Tata Steel’s earnings. Narendran’s annual remuneration of Rs 6.47 crore for 2014-15 was 0.02 per cent of the company's Rs 41,785 crore revenue. As a percentage of profit before tax, it was 0.08 per cent.  Chatterjee’s remuneration as a percentage of revenue was 0.01 per cent and 0.07 per cent as a percentage of profit before tax.

As the global economy remains fragile due to a slowdown in China, it will be interesting to see how Tata Steel keeps costs under control while continuing efforts to lower its Rs 70,452 crore net debt.