Dr Reddy's Undertakes 25% Wage Bill Cut; High-Paid Employees Offered Voluntary Retirement: Report
Pharmaceutical major Dr. Reddy's Laboratories has reportedly initiated a significant workforce reduction to decrease employee costs by approximately 25%, according to a Business Standard report. This initiative involves the departure of several senior executives, including those with annual compensation exceeding Rs 1 crore.
Employees aged 50-55 within the company's Research & Development (R&D) division have been offered voluntary retirement, according to the report. It further stated that multiple high-salaried employees across various departments have already been asked to resign.
NDTV Profit has contacted Dr Reddy's on the same and is yet to receive a response.
The move aligns with Dr. Reddy's ongoing efforts to enhance operational efficiencies. The company's recent expansion into nutraceuticals via a joint venture with Nestle and digital therapeutics, coupled with new product launches, necessitated substantial hiring in prior years.
The potential underperformance in these new ventures could be reason for the current downsizing. The report suggests a potential shutdown of the therapeutics division and a possible downsizing within the nutraceuticals arm, potentially impacting 300-400 employees. A 25% reduction in workforce costs could yield annual savings of approximately Rs 1,300 crore, assuming similar expense levels.
Dr. Reddy's reported consolidated employee benefits expenses of Rs 1,367 crore in Q3 FY25, a 7% increase from the Rs 1,276 crore reported in Q3 FY24. In FY23-24, the company hired 6,281 individuals and invested Rs 39.2 crore in training and development, with total employee benefits expenses reaching Rs 5,030 crore. The median employee remuneration increased by 7% in FY24.
