year. For Pisharody, the proposed annual salary was double of what he earned in 2012-13, and represents a 154% jump in the case of Borwankar over what he earned in the same period.
The resolutions to ratify the salaries of these top management personnel needed shareholder approval due to the inadequacy of profits reported by the company in 2013-14, in accordance with the Companies’ Act, Tata Motors said in an emailed statement issued on Thursday.
“The company takes due note of the postal ballot results,” the Tata Motors’ statement said. “The company takes cognisance of the shareholders’ views; at the same time, it is necessary to balance this with recruiting and retaining an industry-proven management team through the long term. This involves ensuring that the company’s leadership and talent base is appropriately remunerated, notwithstanding cyclical phases.”
Tata Motors added that it was currently considering its options and would move ahead taking into account “the best and most equitable interests of all stakeholders”.
“Tata Motors’ standalone India business is going through a rough time in both the commercial and passenger vehicles segments,” said Surjit Singh Arora, auto sector analyst at Prabhudas Lilladher. “Given the current situation, such a steep hike in salaries seemed difficult to implement and hence did not get shareholders’ approval.”
Tata Motors’ passenger vehicle sales declined 36.7% year-on-year in fiscal 2014, and it was the biggest loser in volume terms among all the carmakers in the Indian market. The company’s commercial vehicle sales fell 28.5% in the same period.
Tata Motor’s standalone revenues for fiscal 2014 stood at Rs 34,288 crore, 23.4% lower than a year earlier. Its net profit in the same period stood at Rs 334.52 crore, around 11% higher over fiscal 2013. In the January-March quarter, Tata Motors posted a big loss of Rs 816.61 crore.
Yashesh Mukhi, auto sector analyst at Morgan Stanley, said that this was another example of the minority shareholders of companies getting more active in voicing their concerns. Recently, the institutional shareholders of Maruti Suzuki opposed the company’s move to allow Japan’s Suzuki Motors to directly set up and operate a plant in Gujarat.