With inflation showing an upward trend, touching a 13 year high of 11%, some players in the cement segment are gearing up to retain talent with better (competitive) hike this year, although the move is expected to put more pressure on the margins of cement producers.
The industry, which is already reeling under the pressure of high input costs, is concerned about holding on their talent as new capacities are being set up and new players are entering the segment.
Speaking to FE, HM Bangur, vice president of the Cement Manufacturers Association (CMA) and CMD of Shree Cement said, ?This year, we are looking at increasing the pay of our employees to about 20% more compared to last year. We have to remain competitive in the industry.?
The average salary hike that prevails in the industry is around 10-15%. Kolkata based Barak Valley Cement Ltd has this year given a hike of 30% to its employees considering the rise in inflation, confirms Bijay Garodia, chairman of the company.
The cement industry is targeting a total of about 280 to 290 mtpa capacity by 2010.
Hence, with new capacities coming up and with new players like Murli Agro, Reliance, and JSW among others entering the industry, competition is likely to become more intense and so will be the race to retain talent in the industry.
KC Birla, Chief Financial Officer of UltraTech Cement Ltd says, ?We are yet to decide on the salary hike. However, we will think on this as we have to remain competitive in the sector. Rising inflation is not the only factor for increase in the salary in the industry. With new capacities coming up, it will also be to avoid migration of people.?
Likewise, Binani Cements Ltd has also increased the pay in the form of increase in the dearness allowances.
Vinod Juneja, Managing Director of Binani Cements Ltd told FE, ?So far, we are in a good position as we have a one year agreement done with the trade union which prevails at the old rate. But you are never sure of things in future.?
?The dearness allowances have been increased in the pay of the company?s employees considering the current scenario. This will impact the company?s bottomline going forward,? he adds.
New players are entering Mumbai because of the high pricing and better realisation, say experts. Other cement players whom FE contacted declined to reveal any information on this saying the salary hike in their companies will be in line with the market.