Disruptions caused by the Covid-19 outbreak have led Reliance Industries (RIL) to implement salary cuts and bonus deferrals for employees in the hydrocarbon business, while the chairman of the company, Mukesh Ambani, will forego his entire compensation, effective April 1, 2020.

In a letter written to employees, Hital R. Meswani, executive director at Reliance, said that effective April 1, 2020, the board of directors including executive directors, EC members and senior leaders will forgo 30-50% of their compensation. Employees drawing less than Rs 15 lakhs per annum will have no reduction in compensation, while those having compensation in excess of Rs 15 lakhs will have a 10% reduction in fixed pay.

It also said that annual cash bonus and performance-linked incentives normally paid in the first quarter stand deferred.

Speaking of the challenges, Meswani said in the letter, “Reliance is no stranger to facing adversities and even in the current situation we have ensured all our manufacturing sites continue to run at near capacity levels and our supply chain are re-engineered for business continuity.”

However, the hydrocarbon business has been adversely impacted due to reduction in demand for refined products and petrochemicals. “This has of course put pressure on our hydrocarbons business necessitating optimisation and cost reductions at all fronts. The situation demands that we maintain razor sharp focus on operating costs and fixed costs and all of us need to contribute to make this happen. This challenging time has necessitated us to take some proactive decisions on our people costs as well,” the letter said.

A spokesperson for RIL confirmed the development to FE. It is unclear if the cuts are limited to only the hydrocarbon business or the same have been implemented in the company’s telecom, retail and media businesses too.

Covid-19 led disruptions have impacted across sectors and industries. The 40-day lockdown put by the government to curtail the spread of the disease has led economic activity come to a standstill, while the repercussions will be felt for the next few quarters, till normalcy in demand and supply chains of companies are restored.

So far, salary cuts were limited to mostly start-ups, small- to medium-scale businesses, and airlines and tourism companies, which have been the first casualties of Covid-19, given the direct impact on their businesses. However, now with RIL joining the fray, the stress seems to be getting more broad-based, and other companies with deep pockets may also follow suit soon.